Effects of switching from channel-specific pricing to uniform pricing in omnichannel retail: Evidence from a quasi-experiment

Abstract

<p>Many omnichannel firms are switching from channel-specific pricing to uniform pricing, but little is known about the immediate and long-term effects of this change. Relying on a quasi-experiment setting featuring a pricing policy change varying across 4,150 products over 18 months, we empirically investigate the effects of uniform pricing on online and offline channel sales. We show that this transition is beneficial for both online and offline sales, with effects becoming increasingly positive over time. Furthermore, we show that the treatment effects can be decomposed into two contrasting effects: a delayed positive effect and an immediate negative effect on product sales. Last, in consumer-level analysis, we show that the treatment effects are due to two distinct behavioral patterns: a decrease in the shopping frequency of 77.4% of the consumers who can no longer leverage price differences between channels and an increase in the activity of 22.6% of consumers who appreciate the ease of search and the comprehensiveness of the omnichannel experience. This study sheds light on an important pricing decision in omnichannel retail—whether to switch from channel-specific to uniform pricing.<br></p>