Yuyun Zhong, PhD Candidate at Drexel University

Title: Information Provision under Showrooming and Webrooming

Abstract: Deviations between consumers’ information gathering and purchase channels may lead to showrooming and webrooming, where the former refers to obtaining product information in a brick-and-mortar store but purchasing online while the latter corresponds to the reverse. In this paper, we endogenize consumers’ information gathering and purchase decisions and characterize the optimal information provision decision for an online retailer in the presence of a rival brick-and-mortar (BM) store. For instances where showrooming can arise, we find that the optimal information level decreases with showrooming probability and that the showrooming behavior may not necessarily be detrimental to the profit of the BM store or improve the profit of the online retailer. In instances with webrooming, we again find that the optimal information level decreases with webrooming probability but that the profit of the online retailer always decreases with the probability that consumers consider webrooming. Further, we also present a comprehensive overview of how various combinations of store and online prices affect the optimal information level. Lastly, we consider an extension for price matching strategies.