The Impact of Mobile Apps on Online and Offline Shopping Behaviors

Abstract

In recent years, the penetration of mobile devices has reached unprecedented levels. Mobile apps account for 87% of mobile usage. Retail apps are among the fastest growing app categories. Do mobile apps influence shoppers’ online and offline purchases and product returns? Further, do in-app experiences, such as app failures experienced by shoppers influence their purchases? The nascent literature on mobile apps is silent on these questions. In this research, I expand the scope of mobile marketing literature by quantifying and explaining the impact of mobile app introduction and app failures on shopping across channels. Unlike prior studies that focus on only online purchases, I consider both online and in-store purchases, and product returns.

In Essay 1, I quantify the impact of mobile app introduction on online and offline purchases and product returns. I leverage data on a large multichannel retailer’s mobile app introduction and use a difference-in-differences regression. I find a 37% lift in net purchases in online and offline channels due to the launch of an app over 18 months. I outline important practical mobile marketing and cross-channel strategies for retailers.

In Essay 2, I quantify the impact of mobile app failures on online and offline purchases. I leverage exogenous systemwide failure shocks in a large multichannel retailer’s mobile app and related data. Importantly, I investigate the heterogeneity among shoppers based on past relationship with the retailer. My results show a 7.1% decrease in purchases in stores due to an app failure. I outline important failure preventive and recovery strategies for app providers.