Omni-Channel Retailing and FirmPerformance from a Customer LifetimeValue Perspective

Liu Xiangdong, Mi Zhuang*, He Mingqin

Business School, Renmin University of China, Beijing

Abstract: In the digital era, retailers are keen to find out whether omni-channel retailinghelps improve long-term firm performance. In this paper, we employ machine learningtechniques on a large consumption data set in order to measure customer lifetime value (CLV)as the basis for determining long-term firm performance, and we provide an empiricalanalysis of the relationship between omni-channel retailing and CLV. The results suggestthat omni-channel retailing may effectively enhance CLV. Further analysis reveals thatthis process is influenced by heterogeneous consumer requirements and that significantdifferences exist in the extent to which the omni-channel transition may influence CLVdepending on consumer preferences for diversity of commodities, sensitivity to the cost ofcontract performance, and sensitivity to warehousing costs. Hence, retailers should provideconsumers with a complete portfolio of goods and services based on target consumers’heterogeneous requirements in order to increase omni-channel efficiency.

Keywords: Omni-channel retailing, customer lifetime value, machine learning,

JEL Classification Codes: L91, M31

DOI: 10.19602/j.chinaeconomist.2024.05.06