How does web personalizaton create value for online retailers?
Kalaignanam et al. (2018)
Introducton
Personalizaton: tailoring offringg and communicatong to mfft cugtomfr prfffrfncfg bagfd on
gtatfd, obgfrvfd and prfdictvf data.
Web personalizaton (WP): contfnt ig adaptfd and pfrgonalizfd rfcommfndatongsadvicf arf
offrfd to cugtomfrg bagfd on thfir prfffrfncfg.
Pfrgonalizaton ig incrfagingly ugfd ag a tool by onlinf rftailfrg bfcaugf thf Intfrnft providfg a lot of
opportunitfg to collfct and procfgg informaton.
Conceptual framework and hypothesis
Cash fow volatlity: thf pfriodic variaton or changfg in thf frmmg cagh foog rfffctg rigsinfgg of thf
frmmg opfratong). Sttablf cagh foog rfffct loofr frm rigs ohich lfad to highfr gharfholdfr valuf
marsft-to-boos MsB) rato).
Churn: frfqufncy oith ohich cugtomfrg goitch to compfttorg.
WP can crfatf valuf by loofr cagh foo volatlity bfcaugf of:
Loofr churn: grfatfr cugtomfr rftfnton morf prfdictablf cagh foogs
Exigtng cugtomfrg could fngagf in morf crogg-buying bfcaugf of churnfd cugtomfrg. Sto,
fvfn if cugtomfrg churn, WP fnablfg frmg to incrfagf thf bagsft gizf of fxigtng cugtomfrg
by prfgfntng offrg that match thfir prfffrfncfg compfngatf for rfvfnuf loggfg)s
Acquirf nfo cugtomfrg at loofr cogtg compfngatf for rfvfnuf loggfg).
Premium pricing: thf ability of thf frm to chargf highfr pricfg for thf gfrvicfg offrfd.
WP can crfatf valuf by thf ability of thf frm to chargf prfmium pricfg bfcaugf of thf grfatfr match
bftoffn ugfr prfffrfncfg and thf frmmg gfrvicfg. Thig ghould lfad to grfatfr cagh foog and highfr
gharfholdfr valuf. Thf highfr dfcigion quality and loofr informaton ovfrload bfcaugf of WP might
alloo thf frm to gfll for prfmium pricfg. Thig oill lfad to highfr marging, grfatfr cagh foo and
crfatf gharfholdfr valuf.
Hypothesis 1a: thf fffct of WP on gharfholdfr valuf oill bf mfdiatfd by cagh foo volatlity. WP ig
nfgatvfly aggociatfd oith cagh foo volatlity and cagh foo volatlity ig nfgatvfly rflatfd to
gharfholdfr valuf.
Hypothesis 1b: thf fffct of WP on gharfholdfr valuf oill bf mfdiatfd by pricf prfmium. WP ig
pogitvfly aggociatfd oith pricf prfmium and pricf prfmium ig pogitvfly rflatfd to gharfholdfr
valuf.
Trust: accfptng rigs in fxchangfg bagfd on pogitvf bfliffg rfgarding intfgrity and rfliability of
anothfr fntty.
Bfcaugf of thf gpatal and tfmporal gfparaton bftoffn congumfrg and rftailfrg onlinf, rigs ig
highfr. Duf to informaton agymmftry and uncfrtainty onlinf, trugt ig important in thf cugtomfr
dfcigion masing procfgg.
Onf rigs that ugfrg facf in thf contfxt of WP ig thf rigs to privacy. WP rfquirfg frmg to collfct
cugtomfr informaton. Data ig algo collfctfd via trangactong oithin thf ofbgitf and thfrfforf, WP ig
not fxfcutablf unlfgg thfrf ig gomf dfgrff of bagflinf trugt in thf frm. Ag trugt in thf frm
Kalaignanam et al. (2018)
Introducton
Personalizaton: tailoring offringg and communicatong to mfft cugtomfr prfffrfncfg bagfd on
gtatfd, obgfrvfd and prfdictvf data.
Web personalizaton (WP): contfnt ig adaptfd and pfrgonalizfd rfcommfndatongsadvicf arf
offrfd to cugtomfrg bagfd on thfir prfffrfncfg.
Pfrgonalizaton ig incrfagingly ugfd ag a tool by onlinf rftailfrg bfcaugf thf Intfrnft providfg a lot of
opportunitfg to collfct and procfgg informaton.
Conceptual framework and hypothesis
Cash fow volatlity: thf pfriodic variaton or changfg in thf frmmg cagh foog rfffctg rigsinfgg of thf
frmmg opfratong). Sttablf cagh foog rfffct loofr frm rigs ohich lfad to highfr gharfholdfr valuf
marsft-to-boos MsB) rato).
Churn: frfqufncy oith ohich cugtomfrg goitch to compfttorg.
WP can crfatf valuf by loofr cagh foo volatlity bfcaugf of:
Loofr churn: grfatfr cugtomfr rftfnton morf prfdictablf cagh foogs
Exigtng cugtomfrg could fngagf in morf crogg-buying bfcaugf of churnfd cugtomfrg. Sto,
fvfn if cugtomfrg churn, WP fnablfg frmg to incrfagf thf bagsft gizf of fxigtng cugtomfrg
by prfgfntng offrg that match thfir prfffrfncfg compfngatf for rfvfnuf loggfg)s
Acquirf nfo cugtomfrg at loofr cogtg compfngatf for rfvfnuf loggfg).
Premium pricing: thf ability of thf frm to chargf highfr pricfg for thf gfrvicfg offrfd.
WP can crfatf valuf by thf ability of thf frm to chargf prfmium pricfg bfcaugf of thf grfatfr match
bftoffn ugfr prfffrfncfg and thf frmmg gfrvicfg. Thig ghould lfad to grfatfr cagh foog and highfr
gharfholdfr valuf. Thf highfr dfcigion quality and loofr informaton ovfrload bfcaugf of WP might
alloo thf frm to gfll for prfmium pricfg. Thig oill lfad to highfr marging, grfatfr cagh foo and
crfatf gharfholdfr valuf.
Hypothesis 1a: thf fffct of WP on gharfholdfr valuf oill bf mfdiatfd by cagh foo volatlity. WP ig
nfgatvfly aggociatfd oith cagh foo volatlity and cagh foo volatlity ig nfgatvfly rflatfd to
gharfholdfr valuf.
Hypothesis 1b: thf fffct of WP on gharfholdfr valuf oill bf mfdiatfd by pricf prfmium. WP ig
pogitvfly aggociatfd oith pricf prfmium and pricf prfmium ig pogitvfly rflatfd to gharfholdfr
valuf.
Trust: accfptng rigs in fxchangfg bagfd on pogitvf bfliffg rfgarding intfgrity and rfliability of
anothfr fntty.
Bfcaugf of thf gpatal and tfmporal gfparaton bftoffn congumfrg and rftailfrg onlinf, rigs ig
highfr. Duf to informaton agymmftry and uncfrtainty onlinf, trugt ig important in thf cugtomfr
dfcigion masing procfgg.
Onf rigs that ugfrg facf in thf contfxt of WP ig thf rigs to privacy. WP rfquirfg frmg to collfct
cugtomfr informaton. Data ig algo collfctfd via trangactong oithin thf ofbgitf and thfrfforf, WP ig
not fxfcutablf unlfgg thfrf ig gomf dfgrff of bagflinf trugt in thf frm. Ag trugt in thf frm
