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com

Journal of Retailing 99 (2023) 46–65

www.elsevier.com/locate/jretai

Multichannel customer purchase behavior and long tail effects in the

fashion goods market ✩
Brian Ratchford b, Gonca Soysal a,∗, Alejandro Zentner b
a Sam M. Walton College of Business, The University of Arkansas, Fayetteville, AR, USA
b The Naveen Jindal School of Management, The University of Texas at Dallas, Richardson, TX, USA
Available online 16 July 2022

Abstract
The fast-paced growth of e-commerce is impacting the type and variety of products consumers purchase across channels. A commonly
held theory, known as long tail theory, posits that online sales are less concentrated at the top of the sales distribution than offline sales,
and that more variety is bought online, making the tails of the overall sales distribution denser with the growth of e-commerce. Most of the
literature testing the long tail theory has focused on examining entertainment goods markets that do not require much physical examination,
and has predominantly found results consistent with the theory. However, the magnitude and antecedents of the observed long tail effects
might be different for product categories containing products that require more physical examination before purchase, such as fashion goods.
In this study, using detailed individual and transaction level panel data from two multichannel fashion goods retail brands, we show that
while the shift to the online channel results in a decrease in the concentration of overall sales for both brands, this change mostly results
from consumers buying different products online rather than consumers buying a greater variety online compared to offline. We show that
the flattening of the overall sales distribution with the growth of e-commerce in our data is driven by consumers sorting their purchases
into channels based on product characteristics. In contrast to the recommendations from the previous long tail literature, our results show
that fashion apparel retailers do not need to offer broader assortments online compared to offline, but they may find it profitable to carry or
emphasize a different product mix online compared to offline. Our results also provide guidance to fashion goods retailers in curating their
online and offline assortments and setting inventory management strategies across the channels.
© 2022 New York University. Published by Elsevier Inc. All rights reserved.

Keywords: E-Commerce; Multichannel customer behavior; Long tail theory; Sales concentration; Omnichannel retailing; Assortment; Inventory; Fashion
goods.

Introduction
The rapid growth of e-commerce in recent years has im-
portant implications for the future of retailing. Drivers of this
growth include the proliferation of portable smart devices,
consumers getting more comfortable with online shopping,
and retailers’ focus on omnichannel business strategies such
as increased investments in the online channel, digital market-
✩ We are grateful to the Wharton Customer Analytics Initiative (WCAI)
and the anonymous retail brands for making the dataset used in this study
available.
∗ Corresponding author.
E-mail addresses: gpsoysal@uark.edu, gsoysal@walton.uark.edu
(G. Soysal).
ing, and channel integration (Neslin and Shankar 2009; Ver-
hoef et al. 2015; Thaichon et al. 2020; Ratchford et al. 2022).
In addition, the Covid-19 pandemic dramatically accelerated
the shift to the online channel; e-commerce sales were up
nearly 45% year-over-year in the second quarter of 2020
(Unglesbee 2020). This digital transformation has created a
need to re-think many elements of firms’ retail offerings, on
the forefront of which lay the retail assortment and inven-
tory management across channels. While academicians and
practitioners agree that the integration of and shift to online
markets will fundamentally change the type and variety of
products consumers purchase, the big question that remains
unanswered is what type of change will take place. This is
an important question because its answer determines what
products firms should focus their efforts on, and what va-

https://doi.org/10.1016/j.jretai.2022.06.007
0022-4359/© 2022 New York University. Published by Elsevier Inc. All rights reserved.
B. Ratchford, G. Soysal and A. Zentner
Fig. 1. Long tail theory. In the figure above, products are placed on the horizontal axis ordered by their popularity (in overall sales volume – sales aggregated
across the offline and online channels), and the vertical axis represents the overall sales volume for each product. Hits (best-selling products) are on the left
and niche products are on the right of the horizontal axis. The long tail theory posits that with the growth of e-commerce, the overall sales distribution will
flatten, and its tail will stretch as can be seen in this figure.
riety of products they should offer/emphasize in both the
online and offline channels, as consumers move more of
their purchases from brick-and-mortar stores to the online
channel.
A strand of previous research studying how the shift to on-
line markets changes consumers’ shopping habits has exam-
ined how the growth of e-commerce impacts the concentration
of the sales distribution (e.g., Brynjolfsson, Hu, and Smith
2003; Brynjolfsson, Hu, and Simester 2011; Zentner, Smith,
and Kaya 2013; Goldfarb et al. 2015). A common theme
in this literature is that while traditionally a few best-selling
products, the superstars, have accounted for a large percent-
age of sales in many markets (e.g., a few new releases or best
sellers take over a majority of the sales in markets for music,
movies, or books), the Internet has the potential to shift this
balance towards less popular products and reduce the con-
centration of sales. The term “long tail” was first used by
Anderson (2004) to describe this phenomenon: as the online
channel grows over time, the share of sales coming from a few
bestsellers declines, and the share that comes from a larger
number of niche products increases. As illustrated in Fig. 1,
the long tail theory postulates that the growth in the share
of online purchases relative to offline purchases will lead to
a flattening of the sales distribution since sales will be more
evenly distributed over a wider range of products rather than
47
Journal of Retailing 99 (2023) 46–65
being concentrated in a few hit products. Anderson (2004) ar-
gued that a clear consequence of this shift is that the future
of business will be in selling less of more; or that it will be
more profitable to sell many niche products rather than sell-
ing a few products in large volumes. Anderson (2004) also
claimed that these concentration effects arise from the online
channel removing the “tyranny of physical space” imposed
by the space limitations of retail outlets.
This supply side explanation, that the much larger as-
sortments offered by online retailers compared to brick
and mortar stores favors the sale of niche products, has
found empirical support in the early long tail literature (e.g.,
Brynjolfsson, Hu, and Smith 2003). In addition, some demand
side drivers have been discussed in this literature, including:
(i) differences in the preferences (heterogeneity) of customers
buying online versus offline (e.g., Zentner et al. 2013); (ii)
lower online search costs combined with search aids such
as recommendation systems leading to easier discovery of
niche products (e.g., Brynjolfsson, Hu, and Simester 2011);
and (iii) the non-personal nature of online interactions allow-
ing consumers to purchase more freely online without social
inhibitions (e.g., Goldfarb et al. 2015).
Long tail effects are often defined as the change in the
concentration of the overall sales distribution (sales aggre-
gated across the online and offline channels) when the share
B. Ratchford, G. Soysal and A. Zentner
of online purchases increases compared to offline.1 However,
this definition overlooks that the change in the concentration
of sales might result from two different types of consumer
cross-channel purchase behavior patterns that have different
managerial implications: (a) consumers buying a greater (or
lesser) variety online compared to offline,2 (b) consumers
buying different products online compared to offline without
necessarily buying more variety online, or a combination of
(a) and (b). The mechanisms discussed above, in particular
cross channel assortment differences or customer heterogene-
ity, might lead to either one of these two purchase patterns.
If consumers buy a greater variety online than offline (as in
(a)), the concentration of sales will be lower in the online
channel compared to offline. This, in turn, will lead to a de-
crease in the concentration of overall sales, as the share of
online purchases increases over time. If, however, consumers
buy different products online and offline (as in (b)), this will
also lead to a decrease in the concentration of overall sales,
as the share of online purchases increases over time, even
when consumers buy similar variety online and offline.
While the previous literature on the long tail has exclu-
sively assumed that the change in the concentration of sales
is a result of consumers buying a greater variety online as in
(a), in this paper we show that the long tail effects might also
be explained by consumers buying different products online
compared to offline. For omnichannel retailers, it is impor-
tant to understand not just how much the concentration of
sales changes with the growth of the online channel, but also
why it changes, since the consumer cross-channel purchase
behavior patterns behind the two explanations ((a) and (b))
have different managerial consequences for retailers’ cross-
channel assortment and inventory strategies. Specifically, the
traditional managerial implication from the literature finding
long tail effects arising from consumers buying greater va-
riety online compared to offline (as in (a)) has been that
it would be profitable for omnichannel retailers to carry a
larger assortment online compared to offline and focus their
marketing efforts on niche products to unleash the long tail
potential. However, if the long tail effects are mainly driven
by consumers buying different products online compared to
offline (as in (b)), retailers do not necessarily need to carry a
larger assortment online compared to offline, but they might
find it profitable to either carry a different product mix online
versus offline or to streamline their online and offline assort-
ments and emphasize different products online versus offline.
For this reason, by examining the link between different types
of consumer cross-channel purchase behavior patterns and the
resulting change in the concentration of sales, we contribute
1 See Section 2 for alternative definitions. The definitions of long tail effects
in the literature abstract away from how products are defined, whether at the
SKU level or at a broader level in the product hierarchy. We show that our
results and conclusions are similar when conducting analyses at the SKU
level or at the style level aggregating across colors and sizes of a particular
design.
2 In our context, buying a greater variety of styles (products) means buying
a greater percentage of the less popular (niche) styles rather than the most
popular (bestselling) styles.
48
Journal of Retailing 99 (2023) 46–65
both to the literatures on multichannel customer purchase be-
havior and on long tail effects.
We believe that the previous literature on concentration
effects has mostly accepted the explanation of consumers
buying a greater variety online because this literature has
mainly focused on a narrow set of products (e.g., books,
music, videos) that have attributes that can be easily com-
municated over the Internet (e.g., price, or the author of a
book), despite some notable exceptions (e.g., Richards and
Rabinovich 2018; Brynjolfsson, Hu and Simester 2011). In
categories where products might also have attributes that are
not easily communicated over the Internet (often called sen-
sory or non-digital attributes) like fit and style of clothing
or ripeness of fresh produce, brick and mortar stores have
a clear and well documented informational advantage over
online stores since they allow physical examination of the
products (Alba et al. 1997; Peterson et al., 1997; Lal and Sar-
vary 1999; Chintagunta, Chu, and Cebollada 2012; Lee and
Bell 2013; Bell, Gallino, and Moreno 2018; Balasubrama-
nian et al. 2005). In such markets, consumers may divide their
purchases between online and offline channels based on the
product characteristics or their knowledge of the products they
plan to purchase (Lal and Sarvary 1999; Betancourt 2016; Be-
tancourt et al. 2016; Balasubramanian et al. 2005). For exam-
ple, the offline channel might be chosen if consumers need to
inspect the product in person or require immediate delivery,
while the online channel can save them travel costs if they
can get sufficient information online, or if they have previ-
ous experience with the product. While consumers’ sorting
of purchases across channels based on product characteristics
has been documented in the literature in the grocery con-
text (e.g., Chintagunta, et al. 2012; Campo and Breugelmans
2015), the long tail literature has overlooked how this sorting
may lead to long tail effects and affect the measurement and
interpretation of these effects.
In this paper, we use detailed individual level transac-
tion data from two leading multichannel fashion goods re-
tail brands to (i) quantify the long tail effects, (ii) demon-
strate the extent to which the measured long tail effects are
driven by consumers buying different products online com-
pared to offline versus consumers buying a greater variety
online compared to offline, and (iii) examine the differences
in the product mixes consumers buy online and offline from
two retail brands that mainly sell apparel and accessories. The
majority of the brands’ offerings are fashion goods with short
lifecycles; however, the brands also carry some more basic
items that have longer lifecycles (e.g., some classic styles of
jeans, socks, underwear, or personal care items) across all di-
visions. We note that apparel is one of the key retail sectors
in the United States. In 2019, sales of clothing and acces-
sories through specialty and department stores in US reached
$502B (9.8% of total retail sales, US Census Bureau 2019).
Our data analyses show that there are substantial differ-
ences in products that are popular in the online versus offline
channels for both retail brands even though their online and
offline assortments are very similar. A large number of prod-
ucts that are best sellers (superstars) in the online channel are
B. Ratchford, G. Soysal and A. Zentner
not popular (are niches) in the offline channel and vice versa.
In particular, items requiring less physical examination (e.g.,
easy-fit items like socks or home textiles like tablecloths)
are more likely to be best sellers online, and items requiring
more physical examination (e.g., pants or fragrances) are more
likely to be best sellers offline. While the fact that consumers
prefer to purchase items requiring more physical examina-
tion in brick-and-mortar stores rather than online has been
suggested in the theoretical literature (e.g., Lal and Sarvary
1999; Balasubramanian et al. 2005) and empirically tested
in the grocery context (Chintagunta et al. 2012; Campo and
Breugelmans 2015), we provide empirical evidence for this
fact in the fashion goods context. We also show that, in the
fashion goods context, repeat purchases of the same product
are more likely to take place online compared to the initial
purchases. We believe these findings will extend to other mar-
kets where products might have important sensory attributes
(e.g., beauty and personal care products, flowers).
Regarding concentration effects, our analyses show that the
growth of e-commerce is associated with a decrease in the
concentration of overall sales for both Brands A and B. For
every 10 percentage-point increase in the share of purchases
taken by the online channel, the concentration of overall sales
is predicted to decrease by 2.88% for Brand A and by 5.77%
for Brand B. However, when we quantify the differences be-
tween the concentrations of online and offline sales, we find
that consumers buy similar variety online and offline. Our re-
sults suggest that consumers buying different products online
versus offline (explanation (b)) explains all of the decrease
in the concentration of overall sales with the growth of e-
commerce for Brand A and more than half of the decrease
for Brand B.3 Our analyses also reveal that neither assort-
ment differences between the two channels nor customer het-
erogeneity explain the change in the concentration of overall
sales; and consumers sorting their purchases into channels
based on product characteristics is the main driver behind the
observed long tail effects in our data.
We believe our results are important for the long tail and
multichannel customer purchase behavior literatures. The ex-
amination of long tail versus superstar e-commerce effects
in the previous literature has overlooked the possible exis-
tence of differences in product popularity across the online
and offline channels. We show that these differences are sub-
stantial in the fashion goods industry and that the existence of
cross-channel product popularity differences due to consumers
purchasing different products online versus offline can lead
to a decrease in the concentration of overall sales with the
growth of e-commerce. In our setting, this conclusion holds
even when consumers purchase similar variety online versus
offline.
Regarding managerial implications, our results suggest that
fashion good retailers might find it profitable to emphasize
products that require physical examination before purchase,
3 The results are similar when defining products at the style level aggre-
gating colors and sizes, when using disaggregated data at the SKU level, and
when limiting the analysis to the apparel categories.
49
Journal of Retailing 99 (2023) 46–65
especially for fit (e.g., apparel tops or bottoms) in their offline
assortments. An important feature of the fashion goods items
is that consumer demand and competition require that retail-
ers refresh the entire assortment every three to four months
due to seasonality and rapidly changing fashion trends (Bi-
tran and Mondschein 1997). This creates high product de-
velopment costs, and also requires that the entire assortment
be sold during the current season (Soysal and Krishnamurthi
2012). For the retailer, increasing assortments is expensive
and risky due to the need to take markdowns if items do not
sell quickly. Because of the short fashion cycle, consumers
are faced with a need to gather new product information ev-
ery time they purchase. The best information on fit and other
sensory attributes comes from personal inspection.
However, other more basic items sold by apparel retail-
ers such as socks, underwear, and men’s basic shirts are not
likely to undergo major changes from season to season, and
style or fit is relatively unimportant. These items can gener-
ally be purchased without a detailed examination and buying
them online is attractive to consumers because it saves travel
costs (Lal and Sarvary 1999). Similarly, the sensory attributes
of products like home décor and home textiles (e.g., sheets,
tablecloths), other categories sold by the focal retailers, can
generally be conveyed online, making them amenable to on-
line sales. There is also evidence that consumers prefer to buy
heavy and bulky items such as furniture online and have them
delivered (Chintagunta et al. 2012; Campo and Breugelmans
2015). In sum, the value of personal inspection imparts an
advantage to offline sales for fashion merchandise. Depend-
ing on consumer travel costs, past experience, and personal
preference other items marketed by the focal retailers can be
sold in either channel.
In contrast to the recommendations from the previous
long tail literature, our results show that omnichannel fashion
goods retailers do not need to offer much broader assortments
online compared to offline, but they may find it profitable to
carry and/or emphasize a different product mix online com-
pared to offline. If the retailers find it profitable to diversify
their online and offline assortments, they can do so by offer-
ing more varieties of products (categories) consumers prefer
to purchase online in the online channel and more varieties
of products (categories) consumers prefer to purchase offline
in the offline channel. If the retailers decide to align their on-
line and offline assortments to avoid consumer confusion or
frustration (Campo and Breugelmans 2015; Melis et al. 2015,
2016; Campo et al. 2021) they might still benefit from em-
phasizing different product mixes in stores versus online using
marketing tools (such as special displays, product placement,
recommendation engines, ranking of search results) or car-
rying larger inventories of different products online versus
offline. In addition, the retailers should consider not only de-
mand, but also the associated cost considerations (e.g., prod-
uct development, logistics, distribution costs) in assortment
planning.
The remainder of the paper is organized as follows. Sec-
tion 2 provides a review of the related literature, Section 3
introduces the data and setting, Section 4 explains the empir-
B. Ratchford, G. Soysal and A. Zentner
Table 1
Different measures used in the long tail literature.
Change in Concentration
of Overall Sales
Brynjolfsson, Hu, Simester (2011)∗ No
Elberse and Oberholzer-Gee 2007 Yes
Zentner, Smith and Kaya 2013 Yes
Gallino, Moreno, and Stamatopoulos 2017 Yes
Brynjolfsson, Hu, Smith (2003) No
Richards and Rabinovich 2018 No
Tan, Netessine, and Hitt 2017 No
This Study Yes
∗ Brynjolfsson, Hu, Simester (2011) use data from the online and catalog channels, they do not use data from the offline channel. Catalog sales are not
equivalent to offline sales for many reasons, one of which is that the catalog channel does not allow inspection of the product at the point of purchase (like
the online channel) while the offline channel does.
ical strategy, Section 5 presents the empirical results, Section
6 discusses the robustness examinations, and Section 7 con-
cludes and discusses limitations and ideas for future research.
Literature review
Much of the earlier long tail literature has overlooked
that the term “long tail effects” has been used to describe
different effects. For example, the results in Elberse and
Oberholzer-Gee (2007), Zentner, Smith and Kaya (2013), or
Gallino, Moreno and Stamatopoulos (2017) are not compara-
ble to the results in Brynjolfsson, Hu and Simester (2011) be-
cause the former measure the impact of e-commerce on the
concentration of the overall sales distribution (sales aggre-
gated across the online and offline channels) and the latter
measures the difference between the concentrations of the on-
line and offline sales distributions. In this study, we present
both measures and show that the two measures are not com-
parable when consumers buy different products online and
offline. Specifically, the concentration of overall sales will
decrease with an increase in the share of online purchases
if consumers buy different products online and offline even
when the concentrations of online and offline sales are sim-
ilar. Under such conditions, the former measure will reveal
long tail effects while the latter measure will reveal no effect.
Moreover, the results in the papers studying omnichannel
contexts are not comparable to the results in research focus-
ing on the online or the offline channel exclusively. Some
examples of papers focusing on a single channel are those
studying (i) the impact of product variety on concentration
of sales in the online channel exclusively (Brynjolfsson, Hu,
Smith 2003; Richards and Rabinovich 2018), (ii) the impact
of product variety on concentration of sales in the offline
channel exclusively (Tan, Netessine, and Hitt 2017), and (iii)
the impact of recommendation systems and popularity lists
on the sales of popular and niche products focusing on on-
line markets exclusively (Tucker and Zhang 2011; Fleder and
Hosanagar 2009; Oestreicher-Singer and Sundararajan 2012).
In Table 1 below we provide a summary of the types of mea-
sures used in different studies in the long tail literature.
50
Journal of Retailing 99 (2023) 46–65
Difference between
Concentrations of Online Change in Concentration of
& Offline Sales Online Sales due to Variety
Yes∗ No
No No
No No
No No
No Yes
No Yes
No Yes
Yes No
The literature on the long tail has also used differ-
ent types of data which also creates confusion. For ex-
ample, Brynjolfsson, Hu, Smith (2003) and Richards and
Rabinovich (2018) use data from the online channel ex-
clusively. Tan, Netessine, and Hitt (2017) use data from
the offline channel exclusively. Elberse and Oberholzer-
Gee (2007) use data that is not disaggregated by channel.
Zentner, Smith and Kaya (2013) and Gallino, Moreno, and
Stamatopoulos (2017) use data from both the online and of-
fline channels. Brynjolffson, Hu, Simester (2011) use data
from the online and catalog channels. In Table 2 below we
provide a summary of the types of data used in different stud-
ies in the long tail literature.
The different definitions of the long tail, the use of these
definitions to examine omnichannel versus single channel
contexts, and the different types of data used to measure long
tail effects have led to apparently conflicting results in the
literature regarding the existence or magnitudes of long tail
effects. By disentangling how the change in the concentration
of sales results from: (a) consumers buying a greater variety
online, versus (b) consumers buying different products online
compared to offline, our paper provides a new way of inter-
preting the results in the previous literature. In addition, our
paper focuses on a product category that has received limited
attention in this literature.
While there is emergent interest in the empirical literature
on examining omnichannel consumer behavior in the fashion
goods market (e.g., Cortiñas et al. 2019; Wang and Gold-
farb 2017; Soysal and Krishnamurthi 2016), none of these
studies have focused on examining the long tail effects of
e-commerce. One exception to this is Brynjolfsson, Hu and
Simester (2011), who also use fashion goods data, but they
compare the concentrations of sales between the catalog and
internet channels. These two channels are similar in their abil-
ity to communicate information about sensory attributes of
apparel items (e.g., personal fit or texture) whereas the of-
fline channel has an advantage over the online channel (and
the catalog channel) as it allows physical examination of
products before purchase. We believe that ours is the only
study that compares the concentration of sales between the
offline and online channels of the same fashion goods retailer.
B. Ratchford, G. Soysal and A. Zentner
Table 2
Different types of data used in the long tail literature.
Online Data
Brynjolffson, Hu, Simester (2011) Yes
Elberse and Oberholzer-Gee 2007 No
Zentner, Smith and Kaya 2013 Yes
Gallino, Moreno, and Stamatopoulos 2017 Yes
Brynjolfsson, Hu, Smith (2003) Yes
Richards and Rabinovich 2018 Yes
Tan, Netessine, and Hitt 2017 Yes
This Study Yes
Richards and Rabinovich (2018) use data from an online-only
grocer and examine the impact of a 40% reduction in the
number of SKUs sold on sales and sales concentration. While
their results shed light to the impact of assortment depth on
sales concentration in the online channel, they do not facilitate
a comparison between the online and offline concentrations
of sales.
There has been a great surge of interest among academi-
cians in examining consumers’ purchase behavior in an om-
nichannel environment, their channel choice decisions, and
more specifically their channel preferences for specific prod-
ucts. Previous research has shown that some key determi-
nants of channel choice decisions include: (i) channel at-
tributes including accessibility, travel/switching costs, and
immediate product availability (e.g., Dholakia et al. 2010;
Venkatesan et al. 2007), (ii) consumer characteristics and
consumer channel experience (e.g., Venkatesan et al. 2007;
Valentini et al. 2011), (iii) firm’s marketing activities (e.g.,
Thomas and Sullivan 2005), and (iv) product characteris-
tics (e.g., Chintagunta et al. 2012). Blattberg et al. (2008),
Neslin et al. (2006), and Neslin and Shankar (2009) provide
detailed reviews of this literature in the context of omnichan-
nel customer management. Our paper extends this literature
by showing that in the fashion goods market, product charac-
teristics influence channel choice decisions based on the pres-
ence/importance of sensory versus digital product attributes.
In each retail purchase transaction, in addition to the prod-
uct, the retailer provides a set of distribution services, includ-
ing accessibility of location, information, assortment (breadth
and depth), assurance of product delivery (in time and form),
and ambiance (Betancourt 2004; Kopalle et al. 2009). Dif-
ferences in the levels of services attainable by each chan-
nel can impact channel choice (Betancourt et al. 2016;
Alba et al. 1997; Peterson et al., 1997) and can lead to seg-
mentation of consumers where some make purchases in both
channels and others only purchase through a single channel
but may partially use distribution services in the other chan-
nel (Betancourt et al. 2016; Cortiñas et al. 2019). Especially
relevant to our study is the difference between the online and
the offline channels in terms of their ability to provide distri-
bution services associated with sensory versus non-sensory
products (Betancourt et al. 2016; Degeratu, Rangaswamy,
and Wu 2000; Pauwels et al. 2011). As discussed earlier,
in categories where products might have important sensory
attributes, the offline channel has a clear informational ad-
Journal of Retailing 99 (2023) 46–65
Offline Data Catalog Data Data not Disaggregated by Channels
No Yes No
No No Yes
Yes No No
Yes No No
No No No
No No No
No No No
Yes No No
vantage since consumers can physically examine and acquire
the product at the point of purchase (Chintagunta et al. 2012;
Liang and Huang 1998; Alba et al. 1997; Peterson et al.,
1997; Lal and Sarvary 1999; Lee and Bell 2013; Bell, Gallino,
and Moreno 2018; Pozzi 2012; Goldfarb et. al 2015; Bal-
asubramanian et al. 2005). Chintagunta et al. (2012) and
Campo and Breugelmans (2015) show that in the grocery set-
ting, physical examination plays an important role when pur-
chasing perishable goods (e.g., fresh produce, meat, seafood,
and bakery items) and thus consumers prefer to buy such
products offline. They also show that consumers prefer to buy
heavy/bulky products online to avoid picking and transporting
them. We extend this literature by showing that in the fash-
ion goods market, similar to the grocery market, consumers
choose to purchase products with important sensory attributes
(e.g., apparel tops or fragrances) offline and heavy/bulky items
(e.g., furniture) online. Importantly, we also show that sorting
of purchases into channels based on product attributes has key
consequences for the measurement and interpretation of the
long tail effects and for retailers’ cross-channel assortment
and inventory management strategies.
Several studies using data from multichannel grocery re-
tailers have shown that in the grocery context, where on-
line assortments are typically smaller than offline assortments,
maintaining a similar assortment online and offline might
beneficial. Since purchase involvement is low in the gro-
cery market and the same products are purchased repeatedly,
similar assortments online and offline allow consumers shop-
ping online to rely on their previous assortment knowledge
gained in the offline channel (Campo and Breugelmans 2015;
Melis et al. 2015, 2016; Campo et al. 2021). For the fash-
ion goods market, we expect a similar transfer of knowledge
between the offline and the online channels for items that
do not have rapidly changing or complex attributes, such as
socks and underwear. These should be interchangeable across
channels and are expected to be bought in both. Conversely,
since goods with a high fashion content have short life cycles
and require detailed inspection on each purchase occasion, the
offline channel has a clear advantage in selling these items.
Data and setting
Our data come from two different brands of a North
American specialty fashion goods retailer. Although these two
brands belong to the same parent company, each brand has
51
B. Ratchford, G. Soysal and A. Zentner
its own online store and brick-and-mortar stores selling an in-
dependent and exclusive line of products from three product
divisions: apparel, accessories, and home furnishings. While
the apparel division accounts for the bulk of sales of the two
brands, the brands also sell accessories and home furnish-
ings. The distribution of the total revenue across divisions
for Brand A (B) is as follows: apparel 75% (69%), acces-
sories 12% (21%), and home furnishings 13% (10%). The
brands sell branded merchandise from other vendors as well
as their private label products across all divisions. The brick-
and-mortar stores from the two brands are not co-located and
the brands are managed independently. Brand A is the larger
brand, with its revenue representing 61% of the parent re-
tailer’s total revenue (in our data) and targets affluent women
between the ages of 30 and 40 (Brand A does not sell men’s
products). Brand B’s revenue represents 28% of the retailer’s
total revenue, and it targets men and women between the ages
of 18 and 30.4
What sets the fashion goods market apart from other mar-
kets like consumer packaged goods or durable goods is that
most fashion products have short lifecycles and are replaced
regularly by new styles because of rapidly changing trends
and consumer tastes. More generally, the product mix of a
retailer can be classified under three main merchandise types:
fashion, seasonal, and basic. Fashion merchandise consists of
items that continuously change based on the latest trends (e.g.,
women’s dresses reflecting the latest trends in color or cut).
The retailers offer several (at least four to five) seasonal lines
of these goods throughout the year and the retailers’ assort-
ment for fashion goods are almost completely refreshed every
three to four months (Bitran and Mondschein, 1997; Lal and
Sarvary, 1999). Since fashion goods reflect the latest trends,
product styles and designs are rarely repeated from season-to-
season or from year-to-year. Basic merchandise (also called
staples) is the opposite of fashion merchandise, and the prod-
ucts remain largely unchanged from season-to-season or year-
to-year (e.g., basic men’s shirts). Although the fashion goods
brands in our data carry some products that have longer
lifecycles and might be classified under basic merchandise
(e.g., some classic styles of jeans, socks, underwear, and per-
sonal care products), these products account for a very small
percentage of either brands’ sales. Seasonal merchandise is
sold only part of the year based on the changes in climate
or certain holidays (e.g., swimsuits, Christmas pajamas, or
eggnog).5 Seasonal products also account for a very small
percentage of either brand’s sales in our data. In the apparel
division (and similarly in accessories and home furnishings),
fashion goods that are associated with extensive use of colors
4 The retailer also owns a third, smaller brand which accounts for 11%
of the retailer’s total revenues but this brand has been excluded from our
analysis since it started as a pure-play online retailer and had very few stores
compared to the other brands during our observation period.
5 One can further divide seasonal goods into seasonal-basics vs. seasonal-
fashions depending on whether the products sold change from year-to-year.
If the retailer sells the same models of Christmas pajamas every year, they
may be classified under seasonal-basics but if the models change every year
based on the latest trends, they may be classified under seasonal-fashions.
52
Journal of Retailing 99 (2023) 46–65
or patterns typically have more “sensory” attributes than more
basic products that have more standardized features.
Our data cover a two-year period from July 1st, 2010,
through June 30th, 2012. Although our data come from a pe-
riod between 2010 and 2012, our discussions with the man-
agement of the retail brands that are the sources of our data,
and our own industry research, has reassured us that there
have not been any major changes in the fashion goods market
in terms of market structure, supply chains, retailers’ market-
ing strategies, or consumer purchase behavior (except for an
increase in the share of the online purchases in overall sales)
since the 2010-2012 period. Thus, our findings in this paper
still apply to the present context.
Each brand randomly sampled a total of 14,000 customers
from all the customers who were “active” during the two-
year data period.6 However, the total number of customers
that we use in our analysis varies across the two brands for
two reasons. First, some customers included in the sample
(since they were considered “active” by the retailer) did not
make any purchases during our study period. Second, when
customers are sampled for a brand, we observe their transac-
tions for both brands.
For each customer, we observe purchases from both the
brands’ physical and online stores. The focal firm matched
credit and debit card purchases to a specific customer (a third-
party service offers matching of different card numbers and
names to a specific customer). Cash purchases are matched
using e-mail addresses or phone numbers (which the store
clerks are trained to request) and account for only 1.7% of
all purchases. For each purchase event, we observe the pur-
chase channel, store number for transactions made at physical
stores, payment method, list of purchased items, and the num-
ber of units and dollar amount for each purchased item. We
also observe product returns and online order cancellations.
The brands charge uniform prices across channels and stores,
as is typical in the fashion goods market, and markdowns are
synchronized across stores and channels.
Table 3 presents summary statistics for our data. These
statistics and empirical analyses are based on “gross demand”
(including returns). However, we replicated the analysis using
net demand and our results are robust to the exclusion of re-
turns as we discuss in the appendix. Over our two-year data
period we observe a total of 197,221 purchase transactions
for Brand A; 19% of these transactions took place online.
For Brand B we observe a total of 148,069 purchase transac-
tions; 27% took place online. A transaction refers to an order.
For instance, if a consumer purchases three different products
from two different categories in a single cashier transaction
in the store or buys them as part of an order placed online
at a certain time, the purchase of those three products would
be considered a single transaction.
6 The retailer defines active using, “a set of key customer events that in-
clude web browsing, purchasing, creating a wish list, responding to direct
marketing.” The company tracks behavior of customers who are active but
do not make purchases due to their interest in converting them to purchasers.
 B. Ratchford, G. Soysal and A. Zentner
Table 3
Summary statistics.

Brand A Brand B

All Customers Offline-Only Multichannel Customers Online-Only All Customers Offline-Only Multichannel Customers Online-Only
Customers Customers Customers Customers
1 2 3 4 5 6 7 8 9 10 11 12
Offline Online Offline Offline Online Online Offline Online Offline Offline Online Online
Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases
Number of Total 160,693 36,528 71,996 88,697 31,211 5,317 107,907 40,162 43,811 64,096 31,409 8,753
Purchases
(Transactions)
Percent of Total 81.5% 18.5% 36.5% 45.0% 15.8% 2.7% 72.9% 27.1% 29.6% 43.3% 21.2% 5.9%
Purchases
(Transactions)
Percent of Total 74.7% 25.3% 30.0% 44.7% 21.7% 3.6% 64.5% 35.5% 25.2% 39.3% 27.9% 7.6%
Revenue
Percent of Total 80.7% 19.3% 34.2% 46.5% 16.6% 2.7% 68.0% 32.0% 26.6% 41.4% 24.8% 7.2%
Quantity Sold
53

Average Total 815.95 276.22 564.33 1454.53 704.79 470.77 288.38 158.83 231.26 466.92 331.94 248.20
Spending per Cust. (1648.68) (1206.67) (909.03) (2445.92) (1760.20) (1911.22) (500.40) (430.18) (362.81) (654.74) (585.34) (479.94)
Average Total 18.5 4.41 13.5 31.7 11.3 7.32 10.69 5.03 8.58 17.30 10.37 8.24
Quantity Purchased (36.22) (19.03) (20.61) (53.56) (29.11) (24.30) (19.14) (13.52) (12.59) (26.03) (17.91) (16.60)
per Cust.
Average Number of 6.69 1.52 5.17 11.0 3.87 2.64 4.00 1.49 3.33 6.32 3.09 2.37
Purchases per Cust. (11.64) (4.97) (6.79) (17.03) (7.34) (6.22) (6.29) (2.88) (4.10) (8.46) (3.63) (2.97)
Average Purchase 115.12 159.95 103.82 134.65 162.92 148.05 70.56 96.17 66.22 76.16 96.94 93.99
(Trans.) Size in $ (99.37) (170.29) (91.30) (109.23) (172.26) (161.67) (62.34) (76.29) (60.21) (64.55) (76.30) (76.19)
(Cond. on purchase)
Average Purchase 2.63 2.54 2.55 2.49 2.85 2.50 2.60 2.96 2.49 2.73 2.96 2.95
(Trans.) Size in (1.76) (2.96) (2.74) (1.72) (1.81) (3.71) (1.82) (2.34) (1.80) (1.84) (2.32) (2.38)
Units
(Cond. on purchase)

Journal of Retailing 99 (2023) 46–65

Number of 24,010 13,931 8,064 2,015 26,940 13,121 10,140 3,679
Customers
Percent of 100% 58.0% 33.6% 8.4% 100% 48.7% 37.6% 13.7%
Customers
Standard deviations are in parentheses.
B. Ratchford, G. Soysal and A. Zentner
Based on their purchase behavior over the two-year period,
we divide customers into three mutually exclusive segments
for each brand. A multichannel customer purchased at least
once from both the online and offline channels of the firm. An
offline-only (online-only) customer purchased at least once
from the offline (online) channel and did not make any pur-
chases from the other channel. Out of the 24,010 (26,940)
unique customers who made a purchase from Brand A (B),
58% (48.7%) are offline-only, 33.6% (37.6%) are multichan-
nel, and 8.4% (13.7%) are online-only customers. Multichan-
nel customers are highly engaged with the retail brands; and
account for 66.4% (67.2%) of the of total revenues for Brand
A (B). They not only buy more often, but also buy more
units and spend more per transaction in the offline channel
compared to offline-only customers and in the online chan-
nel compared to online-only customers. Because a substantial
portion of the customers in our data purchase through both
channels, and we also observe several transactions per cus-
tomer, we are able to exploit the panel nature of the data in
our empirical analysis. Multichannel customers made on av-
erage 11.0 (6.32) transactions offline and 3.87 (3.09) transac-
tions online for Brand A (B) during the two-year observation
period.
Although on average consumers purchased a similar num-
ber of units per transaction when they used the online or the
offline channels, the variation of the number of units pur-
chased relative to the mean is higher online compared to of-
fline, especially for Brand A (coefficient of variation is 1.16
(1.43) online and 0.67 (1.27) offline for Brand A (B). For
Brand A (B) they purchased an average of 2.54 (2.96) units
when they used the online channel, and 2.63 (2.60) units when
they used the offline channel.
For our empirical examination we need to specify the ap-
propriate level in the product hierarchy that we will use in our
analysis. Unlike the case of movies or books where the title
might suffice to identify a unique product (the literature typ-
ically treats movie or book titles as a “product” independent
of the format), in the apparel industry a unique style (de-
sign) is often offered in a large variety of sizes and colors.
SKUs are unique identifiers for a color and size combination
within specific styles. The style code identifier in our data
aggregates over colors and/or sizes for apparel items as well
as non-apparel items (e.g., accessories, kitchenware, or fur-
niture) sold in multiple colors/sizes. One can therefore either
conduct the analysis at the style level or at the unique SKU
level and choosing the unit of analysis is not straightforward.
We present our analysis at the style level in the main text be-
cause our focal brands do their planning, present products to
consumers, and record reviews and ratings at the style level.
However, we replicated the analysis at the SKU level and our
conclusions do not change when we use SKU level data as
we discuss in Appendix A.
Fig. 2 shows the commonality of superstar (top 100 best-
selling) products across the online and offline channels for
our observation period for both brands. Areas B, C, and D
in Fig. 2 represent the 100 products with highest overall unit
sales (Top 100 Overall). The products in area B are among
54
Journal of Retailing 99 (2023) 46–65
the Top 100 in sales in the offline channel and in overall
sales but are not among the Top 100 in sales in the online
channel, and the products in area D are among the Top 100
in sales in the online channel and in overall sales but are not
among the Top 100 in sales in the offline channel. The prod-
ucts in area C (the middle intersection) are in the Top 100
in all overall sales, online sales, and offline sales. The low
commonality of top products online and offline is remarkable
for both brands. Only 43 products for both Brands A and
B rank within the Top 100 in sales in both the online and
offline channels. These statistics demonstrate the important
differences in product popularity across the online and offline
channels.
Area A (E) in Fig. 2 represents the products that are among
the Top 100 from the offline (online) channel, but not among
the Top 100 using overall sales from both channels. Area E
in Fig. 2 is rather large for both (50 for Brand A and 57
for Brand B) brands. Area A is smaller than Area E because
the offline channel takes a substantially larger share of overall
sales than the online channel. The offline channel has a larger
share of overall sales compared to the online channel (81.5%
of all transactions for Brand A and 72.9% for Brand B take
place in brick-and-mortar stores). Thus, the list of popular
products when ranking products using overall sales is domi-
nated by products that are popular from the offline channel.
In Tables 4a, and 4b we further investigate the differences
in product popularity ranks online and offline by computing
popularity ranks for various thresholds. For example, the top
left cell in Table 4a for Brand A shows that only 21 of the
top 50 products offline are also within the top 50 products
in the online channel. Table 4a also shows that some prod-
ucts can be very popular in one channel and have very low
sales in the other channel (e.g., for Brand A 10 of the top
50 online products are not even among top 1,000 products
offline). Tables 4b shows similar differences across channels
for Brand B.
While Fig. 2 reveals the differences in superstar products
in online and offline markets, Tables 4a and 4b further re-
veal that a substantial number of products are superstar in
one channel and niche in the other channel. Together these
statistics document large cross-channel product popularity dif-
ferences that are consistent across the two specialty fashion
goods retail brands.
Online versus offline assortment in the fashion goods
industry
Assortment is much larger online than offline in some
industries, such as in the video rental industry (Zent-
ner et al. 2013). However, as we show in the appendix, there
are almost no assortment differences across the channels for
either of our focal brands. We also note that our focal brands
are typical in the fashion goods industry. Specifically, based
on conversations with managers from other large omnichan-
nel specialty fashion goods retailers (i.e., GAP, Talbots, Ann
Taylor) we note that these brands also carry similar selections
online and offline.
B. Ratchford, G. Soysal and A. Zentner Journal of Retailing 99 (2023) 46–65

Fig. 2. Commonality in popular products in online and offline channels.

Table 4a
Comparison of popular products offline vs. online for brand A for various rank thresholds.

Online

<51 51-100 101-150 151-200 201-250 251-300 301-1000 >1000

Offline <51 21 7 3 3 2 1 5 8
51-100 7 8 9 7 5 4 8 2
101-150 5 3 8 3 5 1 12 13
151-200 1 4 6 4 6 3 21 5
201-250 2 1 6 3 5 4 20 9
251-300 1 1 0 5 2 3 23 15
301-1000 3 13 6 14 10 17 264 373
>1000 10 13 12 11 15 17 347 16981

It is important to distinguish our context (in which we are
comparing online and offline sales of the same omnichannel
retailer) from one that compares the assortment of pure-play
online retailers to the assortments at physical stores of com-
peting omnichannel retailers. For example, both Quan and
Williams (2018) and Tang, Lin, and Kim (2016) use data from
a pure play online shoe retailer (e.g., Zappos.com) and from
the physical stores of competing retailers (e.g., Macy’s, Pay-
less, Clarks) and argue that assortment differences between
the pure-play online retailer and the physical stores of the
omnichannel retailers (especially those that sell products from
a single brand like Clarks) are large in their context.
Empirical strategy
In this \n we present the empirical strategy we use to mea-
sure how much the concentration of sales changes with the
growth of e-commerce. As we discussed earlier, in addition to

55
B. Ratchford, G. Soysal and A. Zentner Journal of Retailing 99 (2023) 46–65

Table 4b
Comparison of popular products offline vs. online for brand B for various rank thresholds.

Online

<51 51-100 101-150 151-200 201-250 251-300 301-1000 >1000

Offline <51 22 5 4 1 4 1 7 6
51-100 5 11 4 3 1 1 14 11
101-150 2 1 2 2 2 3 21 17
151-200 2 2 1 1 3 2 24 15
201-250 3 3 1 1 2 2 17 21
251-300 0 1 1 0 2 2 15 29
301-1000 2 10 10 14 9 8 113 534
>1000 14 17 27 28 27 31 489 28851

measuring the magnitude of the long tail effects we also in-
vestigate whether the concentration of overall sales (sales ag-
gregated across the online and offline channels) changes due
to: (a) consumers buying a greater variety online compared to
offline, (b) consumers buying different products online com-
pared to offline, or a combination of (a) and (b). Our initial
analyses presented above have shown that product popular-
ity is significantly different in the online and offline channels
despite the two channels carrying very similar assortments.
This provides some model-free evidence that consumers buy-
ing different products online compared to offline might be
an important explanation behind the long tail effects in our
empirical setting (explanation (b) above). As we discussed
earlier, it is important for the retailer to understand not just
how much the concentration of sales changes with the growth
of the share of sales from the online channel, but also why
the concentration of sales changes since different explanations
have different managerial implications.
In order to measure how the concentration of overall sales
changes as the share of online sales compared to offline sales
increases, we use individual and transaction level panel data.
In our data, a transaction refers to an order. If a consumer
purchases multiple items in a single cashier transaction in the
store or as part of an online order placed at a certain time,
the whole purchase would be considered a single transaction.
For each purchase transaction in the data made by individual
i on date t (of month m) that might represent the purchase of
multiple items we define a dummy variable indicating whether
the transaction was made online or offline:
 tration of overall sales (sales aggregated across the online
1 i f t he t ransaction was made online
Dummy Onlinei,t (m ) =
0 i f t he t ransaction was made o f f line
Following Zentner et al. (2013) to facilitate the comparison
to the previous literature on the long tail, for each purchase
transaction we also define the share of products in the transac-
tion taken by the purchases of top 100 products as follows:
o
Share T op 100i,t (m )
Number o f T op 100 Overall U nits Purchased in T ransact ion i, t (m )
=
T otal Number o f U nits Purchased in T ransaction i, t (m )
The superscript o and subscript m refer to the sales
rankings used to compute the numerator of the variable
Share T op 100ito (m) and indicate that the sales rankings are
calculated using monthly (subscript m) overall sales (sales ag-
gregated across the online and offline channels and across all
customers; superscript o). We update the sales ranks monthly
and thus have twenty-four overall sales ranks for each retail
brand, one for each month in our data, since product popular-
ity might change over time due to seasonality and changes in
the retail brands’ assortments. Share T op 100ito (m) measures
the concentration of sales (defined as the share of top 100
products as a percent of total unit sales) in each transaction
and top 100 products are determined based on the overall
sales in the month the transaction takes place. In these anal-
yses, each transaction corresponds to one row in our data.
Our empirical approach in measuring the change in the
overall concentration of sales with the growth of e-commerce
is to estimate fixed effects models of the following form:
(m ) = α + β Dummy Onlinei,t (m) + ψm + uit
o
Share T op 100i,t
(1)
Model (1) examines the change in the share of products
in each transaction taken by the purchases of top 100 prod-
ucts (based on overall sales) when consumers move their pur-
chases from the offline channel to the online channel (when
the dummy variable representing an online purchase transac-
tion goes from 0 to 1). In Model (1) ψm represents a fixed
effect for month m. Month fixed effects (there are 24 of those
for our two-year data observation period) absorb time shocks
to concentration of sales such as time trends or seasonality
shocks.
While Model (1) allows us to measure how the concen-
and offline channels) changes with the growth of ecommerce,
we also want to examine whether this change occurs due to:
(a) consumers buying a greater variety online compared to
offline, (b) consumers buying different products online com-
pared to offline, or a combination of (a) and (b). In order to
distinguish between these two explanations, we will next mea-
sure the difference between the concentrations of sales in the
online and offline channels. Our method is analogous to sep-
arately measuring online and offline concentrations of sales
and calculating the difference between the two concentrations
but has the added advantage of allowing the inclusion of time
and consumer fixed effects. These fixed effects control for the
impact of time specific effects like seasonality or time-trends
and individual (consumer) heterogeneity on the concentration

56
B. Ratchford, G. Soysal and A. Zentner
of sales. Measuring the difference between the concentrations
of sales in the online and offline channels helps us isolate the
effect of the first explanation (i.e., consumers buying a greater
variety online compared to offline) on the measured long tail
effects by controlling for the second explanation (i.e., con-
sumers buying different products online compared to offline).
In order to measure the difference between the concentrations
of sales in the online and offline channels, we first define the
variable Share T op 100itc :
c
Share T op 100i,t (m )
⎧
100 Online U nits in T ransaction i,t (m )
⎨ TopU nits Purchased in T ransact ion i,t (m )
i f Dummy Onlinei,t (m ) = 1
= metric, which is not surprising since in our context assortment
⎩ Top 100 O f f line U nits in T ransaction i,t ( m )
i f Dummy Onlinei,t (m ) = 0
U nits Purchased in T ransact ion i,t (m )
where the superscript c indicates that channel specific monthly
sales rankings are used for each purchase transaction to com-
pute the numerator of the variable Share T op 100itc (m) . In
other words, if the transaction (by customer i, at time t in
month m) takes place in a physical store (online) we use the
sales in month m from the offline (online) channel only to
determine which products belong to the top 100 bestselling
products in that month. Once again, we calculate monthly
sales ranks for each channel and thus we have twenty-four on-
line and twenty-four offline sales ranks for both retail brands
to allow for changes in product popularity over time.
To measure the difference between the concentrations of
sales from the online and offline channels we estimate fixed
effects models, similar to Model (1), of the following form:
(m ) = α + β Dummy Onlinei,t (m) + ψm + uit
c
Share T op 100i,t
(2)
Model (2) isolates the difference between the concentra-
tions of online and offline purchase transactions by measur-
ing the share of products in each transaction taken by the
purchases of top 100 products (based on sales from the chan-
nel transaction takes place) when consumers purchase from
the offline compared to the online channel (when the dummy
variable representing an online transaction goes from 0 to
1). In Model (2) ψm represents a fixed effect for month m,
similar to Model (1).
We showed that there are large differences between the
popularity rankings of products across online versus offline
markets in our context: some niche products in the offline
market are popular products in the online market and vice
versa. For this reason, it becomes necessary to disentangle
the differences in the spread (concentrations) of the online and
offline sales distributions from differences in product popular-
ity (the differences in the locations of the online and offline
sales distributions). By separately evaluating the popularity
ranks for transactions made at physical stores versus online,
our second model is useful for examining whether consumers’
purchases become more or less concentrated (second distri-
bution moment) as purchases from the online channel relative
to those from the offline channel increase in a way that is not
contaminated by the differences in product popularity across
57
Journal of Retailing 99 (2023) 46–65
the channels (differences in the locations of the online and
offline sales distributions).
Finally, Brynjolfsson et al. (2010) proposes alternative
ways to measure the long tail. In this paper we use an “abso-
lute” long tail metric, because it represents the share of sales
taken by products ranked above an absolute cut-off (we use
the top 100 products in our empirical analysis, our results are
not sensitive to the cut-off). Brynjolfsson et al. (2003) and
Zentner et al. (2013) also use an absolute long tail metric.
Other papers use a “relative” long tail metric, which repre-
sents the share of sales above or below a certain rank per-
centile. We note that the conclusions are similar using either
is similar online and offline.
Empirical results
Table 5 presents Ordinary Least Squares (OLS) estimation
results for Models (1) and (2) using data from Brands A and
B. All the regressions include 24 month (time) fixed effects
to control for seasonality and time trends. The standard errors
are clustered at the individual level in all columns to allow
for the possibility of heteroskedasticity and serial correlation
over time.
In Column I of Table 5 we present estimation results from
Model (1) that measures the impact of e-commerce on the
concentration of overall sales (sales aggregated across the
online and offline channels). Concentration is defined as the
share of purchases (in units) taken by the top 100 products in
a purchase transaction relative to total units purchased. The
regression results show long tail effects for both brands: the
share of transactions taken by the top 100 products (based
on overall sales) decreases when the dummy variable rep-
resenting an online purchase transaction goes from 0 to 1.
The predicted long tail effects are statistically significant and
large in size for both brands. For Brand A (B) the top 100
products take 24.4% (19.9%) of all sales, and the estimation
results predict that the share of transactions taken by the top
100 products would decrease by 2.88% (5.77%) for every 10-
percentage point increase in the share of purchases taken by
the online channel for Brand A (B).7
In Column II of Table 5 we present estimation results
from Model (2) that measures the difference between the con-
centrations of online and offline sales. As discussed earlier,
examining the difference between the concentrations of on-
line and offline sales (Model (2)) and comparing the result
to changes in the concentration of overall sales (Model (1))
helps us to understand the relative importance of the two
types of changes that might drive the concentration of sales
as consumers move to online markets: (a) consumers buying
a greater variety online compared to offline (Model (2)), and
7 For Brand A, the predicted impact is computed multiplying 10% (0.1) by
the ratio of the regression coefficient (-0.0704) and the proportion of transac-
tions taken by the top 100 products (0.244): -2.88% = 0.1 x (-0.0704/0.244).
For Brand B, the impact is computed as -5.77% = 0.1 x (-0.1148/0.199). All
other effect sizes reported in this section are calculated in a similar fashion.
B. Ratchford, G. Soysal and A. Zentner Journal of Retailing 99 (2023) 46–65

Table 5
Share taken by top 100 products in each transaction OLS estimates.

I II III IV V VI
Long Tail Long Tail Long Tail Long Tail Long Tail Long Tail
Estimates(Change Estimates(Difference Estimates(Change in Estimates(Difference Estimates(Change in Estimates(Difference
in Overall Between Online and Overall Concentra- Between Online and Overall Concentra- Between Online and
Concentration) Offline tion)Controlling for Offline Concentra- tion)Controlling for Offline Concentrations)
Concentrations) Heterogeneity tions)Controlling for Heterogeneity & Controlling for
Heterogeneity Assortment Heterogeneity &
Assortment
Brand A
Dummy -0.0704∗∗∗ 0.0003 -0.0708∗∗∗ 0.0038 -0.0643∗∗∗ 0.0062∗
Online
Purchases
(0.0021) (0.0022) (0.0031) (0.0035) (0.0032) (0.0036)

Observations 171,964 171,964 171,964 171,964 166,988 166,988

R-squared 0.0097 0.0034 0.1967 0.1866 0.1978 0.1889
Brand B
Dummy -0.1148∗∗∗ -0.0587∗∗∗ -0.1162∗∗∗ -0.0577∗∗∗ -0.1029∗∗∗ -0.0503∗∗∗
Online
Purchases
(0.0019) (0.0020) (0.0027) (0.0030) (0.0030) (0.0033)

Observations 134,934 134,934 134,934 134,934 125,169 125,169

R-squared 0.0273 0.0082 0.2743 0.261 0.2773 0.2658
1. Columns I and II include month fixed effects (for 24 months). Columns III-VI include, in addition to month fixed effects, individual fixed effects (Company
A: 22,231 individual fixed effects; Company B: 23,382 individual fixed effects).
2. In Columns V and VI, the estimation sample was restricted to products that are common to both online and offline channels to control for cross-channel
assortment differences.
3. Standard errors in parentheses are clustered by customer.
4. ∗ Significant at 10%; ∗∗ significant at 5%; ∗∗∗ significant at 1%.
5. For firm A, the mean of the dependent variable is 0.244 in Columns I and III, 0.262 in Columns II and IV, 0.252 in Column V, and 0.271 in column VI.
For firm B, the mean of the dependent variable is 0.199 in Columns I and III, 0.222 in Columns II and IV, 0.214 in Column V, and 0.238 in column VI.
The mean of the independent variable (Dummy Online Purchases) is 0.190 for Firm A, and 0.279 for Firm B in all columns.

(b) consumers buying different products online compared to
offline (Model (1)). In other words, Model (2) isolates the
effect of explanation (a) on the change in overall concentra-
tion of sales by controlling for explanation (b) in estimating
long tail effects. Model (2) achieves this by using sales from
the offline channel when determining the product popularity
ranks for transactions made in physical stores and sales from
the online channel when determining the product popularity
ranks for transactions made in the online channel. This con-
trols for cross-channel product popularity differences when
measuring concentrations of sales from the two channels.
The coefficient estimates in Column 2 are close to 0 in
magnitude and statistically insignificant for Brand A. This in-
dicates that the concentrations of sales are similar online and
offline for Brand A when measured separately, taking into
account that different products may be popular online versus
offline. Combined with the results from Column I that show
that an increase in the share of online purchases leads to a
decrease in the overall concentration of sales for Brand A,
these results show that the decrease in the concentration of
overall sales with the growth of e-commerce for Brand A is
entirely driven by consumers buying different products online
compared to offline, and not by consumers buying a greater
variety online compared to offline. The regression results in
Column II for Brand B show that after controlling for product
popularity differences, the estimated long tail effects (corre-
sponding to a 10 percentage-point increase in the share of
online purchases) dramatically drop from 5.77% to 2.65%.
Comparing the estimation results from Columns I and II for
the two brands we can conclude that, consumers buying dif-
ferent products online versus offline (as opposed to buying a
greater variety online compared to offline) explains all of the
change we observe in the concentration of overall sales for
Brand A and more than half of the change we observe in the
concentration of overall sales for Brand B with the growth of
e-commerce.
Next, we examine the extent to which two potential mech-
anisms, consumer heterogeneity or assortment differences be-
tween the online and offline channels, explain the long tail
effects in our data. In order to examine the extent to which
consumer heterogeneity explains the long tail effects in our
data, we estimate Models (1) and (2), including individual
(consumer) level fixed effects (as well as time fixed effects)
and present the estimation results in Columns III and IV of
Table 5 respectively. Inclusion of individual fixed effects helps
us control for customer heterogeneity in purchase behavior
from time-invariant characteristics of each individual as well
as other characteristics that are unlikely to change substan-
tially during our two-year observation period (e.g., income or
household size).

58
B. Ratchford, G. Soysal and A. Zentner
The results in Column III compared to those in Column
I and in Column IV compared to those in Column II, show
that the estimated long tail effects (corresponding to a 10
percentage-point increase in the share of online purchases)
practically remain unchanged with the inclusion of individ-
ual fixed effects for both brands: they change from 2.88%
to 2.90% between Columns I and III, and from 0.01% to
0.15% between columns II and IV for Brand A. Similarly,
they change from 5.77% to 5.84% between Columns I and
III, and from 2.65% to 2.60% between columns II and IV for
Brand B. Based on the results from these regressions we con-
clude that individual level heterogeneity in purchase behavior
cannot be the main mechanism behind the long tail effects
we observe in our data. Comparing results between Columns
III and IV, we see a similar change in the estimated long tail
effects to that from comparing results between Columns I and
II. These results show that our observations regarding the rel-
ative importance of the two explanations ((a) and (b) above)
behind the change in the overall concentration of sales with
the growth of e-commerce do not change after controlling
for customer heterogeneity. Controlling for product popularity
differences between the channels still leads to the estimated
long tail effects becoming statistically insignificant and drop-
ping to approximately zero (from 2.9% to 0.15%) for Brand
A, and also decreasing dramatically for Brand B (from 5.84%
to 2.6%).
In order to examine the extent to which assortment dif-
ferences between the online and offline channels explain the
long tail effects in our data, we estimate Models (1) and (2),
restricting our estimation sample to products that are com-
mon to the online and offline channels (as well as including
individual and time fixed effects) and present the estimation
results in Columns V and VI of Table 5 respectively. This ap-
proach is analogous to Brynjolfsson, Hu, and Simester (2011),
who control for assortment differences between the catalog
and the online channels by restricting their analysis to prod-
ucts available from both the catalog channel and the online
channel. To determine which products are common to the two
channels we use identifiers in our data that specify whether
each product was available for sale online-only, offline-only,
or through both channels. Our results are also robust to two
alternative ways of defining product availability by channel,
as we discuss in the Appendix. In the first (second) defini-
tion, a product is considered available through a channel only
if it has non-zero sales (more than 5% of its total sales) in
the channel. The results in Column V compared to those in
Column III show that estimated long tail effects (correspond-
ing to a 10 percentage-point increase in the share of online
purchases) decrease slightly after controlling for the assort-
ment differences between the online and offline channels: they
change from 2.90% to 2.54% for Brand A and from 5.84% to
4.82% for Brand B. Based on the results from these regres-
sions we conclude that assortment differences between the
online and offline channels can also not be the main mecha-
nism behind the long tail effects we observe in our data. The
results also show that our observations regarding the relative
importance of the two explanations behind the change in the
59
Journal of Retailing 99 (2023) 46–65
overall concentration of sales with the growth of e-commerce
do not change after controlling for assortment differences be-
tween the online and offline channels as well as customer
heterogeneity. Controlling for product popularity differences
still leads to the estimated long tail effects becoming statisti-
cally insignificant and dropping to almost zero (from 2.54%
to 0.23%) for Brand A and decreasing dramatically for Brand
B (from 4.82% to 2.11%).
To summarize, the results show that consumers buying dif-
ferent products online and offline is the main reason behind
the observed long tail effects (change in concentration of over-
all sales) in our data and neither consumer heterogeneity nor
assortment differences between the online and offline chan-
nels can be the main mechanisms behind the observed long
tail effects in our data. One other potential mechanism sug-
gested in the literature is the use of search aids online leading
to easier discovery of niche products (e.g., Brynjolfsson, Hu,
and Simester 2011). The focal retail brands did not use any
search aids like popularity lists or recommendation systems
and thus this mechanism cannot drive the long tail effects in
the data.
Examining product popularity differences between the online
and offline channels
We showed that consumers buying different products on-
line and offline is the main reason behind the observed long
tail effects in our data. Next, to better understand the mech-
anism behind the product popularity differences between the
online and offline channels, we examine the differences in the
product mixes bought online and offline using customer level
transaction data and a panel data fixed effects linear proba-
bility channel choice model (conditional on purchase). Each
observation, in these analyses, is identified by the transac-
tion number and the style (product) number. If a customer,
for example, purchases three different styles on a particular
date and time in a specific transaction (online or offline), we
would observe three rows in our data for this transaction. The
dependent variable, Onlineit , is a channel choice dummy and
is set to 1 if the transaction for customer i at time t takes
place online and to 0 otherwise. In these analyses, we aim to
understand not only the differences in the types of products
consumers choose to purchase online and offline but also the
impact of the product’s price and customers’ distance to the
retail brand’s closest physical store on channel choice deci-
sions. The explanatory variables include per unit price of the
product purchased, consumer’s distance to the closest physi-
cal store of the retail brand at the time of purchase, category
fixed effects (one each for the thirteen product categories in
our data),8 and time fixed effects (one each for the 24 months
8 We closely follow the retailer’s product groupings in defining the prod-
uct categories. The apparel division includes apparel tops, apparel bottoms,
dresses & outerwear, and intimate apparel categories. The accessories divi-
sion includes accessories, jewelry, shoes, and beauty & fragrance categories.
The home furnishing division includes home textiles, tabletop & kitchenware,
furniture, home decor, and gifts & seasonal merchandise categories. Brand B
B. Ratchford, G. Soysal and A. Zentner Journal of Retailing 99 (2023) 46–65

Table 6
Drivers of channel choice decisions.

Brand A Brand B

(I) (II) (III) (IV)

Variables Online Channel Online Channel Variables Online Channel Online Channel Ch.
Choice Ch.(Controlling Choice (Controlling
Heterogeneity) Heterogeneity
Price ($ per unit) 0.0008∗∗∗ 0.0005∗∗∗ Price ($ per unit) 0.0006∗∗∗ 0.0009∗∗∗
(0.0000) (0.0000) (0.0000) (0.0000)
Distance to Store 0.0003∗∗∗ 0.0003∗∗∗ Distance to Store 0.0003∗∗∗ 0.0023∗∗∗
(miles) (miles)
(0.0000) (0.0001) (0.0000) (0.0001)
Apparel Tops -0.0326∗∗∗ -0.0357∗∗∗ Apparel Tops -0.0462∗∗∗ -0.0327∗∗∗
(0.0026) (0.0022) (0.0062) (0.0049)
Apparel Bottoms -0.0396∗∗∗ -0.0353∗∗∗ Apparel Bottoms -0.0316∗∗∗ -0.0254∗∗∗
(0.0031) (0.0025) (0.0065) (0.0052)
Accessories 0.0035 -0.0104∗∗∗ Accessories -0.0168∗∗∗ -0.0124∗∗
(0.0033) (0.0027) (0.0064) (0.0051)
Dresses & Outerwear -0.0013 -0.0162∗∗∗ Dresses & Outerwear 0.0061 -0.0044
(0.0034) (0.0028) (0.0066) (0.0052)
Intimate Apparel 0.0246∗∗∗ 0.0102∗∗∗ Intimate Apparel 0.0111∗ 0.0096∗
(0.0030) (0.0025) (0.0067) (0.0053)
Jewelry 0.0388∗∗∗ 0.0136∗∗∗ Jewelry 0.0320∗∗∗ 0.0297∗∗∗
(0.0035) (0.0029) (0.0067) (0.0053)
Furniture 0.0119 0.0383∗∗ Home Furnishings 0.1734∗∗∗ 0.1176∗∗∗
(0.0223) (0.0177) (0.0077) (0.0060)
Home Decor 0.0150∗∗∗ 0.0188∗∗∗
(0.0043) (0.0036)
Home Textiles 0.1047∗∗∗ 0.0795∗∗∗ Home Textiles 0.4612∗∗∗ 0.3207∗∗∗
(0.0041) (0.0033) (0.0082) (0.0065)
Gifts & Seasonal -0.0460∗∗∗ -0.0314∗∗∗ Gifts & Seasonal -0.0714∗∗∗ -0.0360∗∗∗
Merchandise Merchandise
(0.0038) (0.0031) (0.0066) (0.0052)
Beauty & Fragrance -0.0905∗∗∗ -0.0483∗∗∗
(0.0033) (0.0026)
Product Gender 0.0215∗∗∗ -0.0002
(Men’s==1)
(0.0024) (0.0024)
Observations 398,359 398,359 Observations 311,314 311,314
R-squared 0.0320 0.4807 R-squared 0.0528 0.5395
1. Columns I and III include month fixed effects (for 24 months). Columns II and IV include, in addition to months fixed effects, individual fixed effects
(Company A: 22,231 individual fixed effects; Company B: 23,382individual fixed effects).
2. Kitchenware and Tabletop is the base category for both brands.
3. Standard errors in parentheses.
4. ∗∗∗ p < 0.01, ∗∗ p < 0.05, ∗ p < 0.1.
5. Mean of the dependent variable is 0.175 for Brand A and 0.273 for Brand B.

in our data). For Brand B that sells products for both men and
women we also include a dummy for the “product’s gender”
(i.e., if the product is designed for men or women).
Columns I and III of Table 6 present panel data OLS re-
gression estimation results for Brands A and B respectively
(between customers estimation results). In Columns II and
IV of Table 6, we present estimation results from the same
analyses for Brands A and B respectively, including individ-
ual (customer) fixed effects in addition to time fixed effects
(within-customer estimation). Including customer fixed effects
ensures that time-invariant customer characteristics and in-
does not sell beauty & fragrance products and combines furniture and home
décor under home furnishings. Shoes are excluded from analyses since they
are only sold online.
herent channel preferences are controlled for in the analyses.
Comparing estimation results excluding versus including indi-
vidual fixed effects (i.e., comparing results between Columns
I versus II for Brand A, and III versus IV for Brand B) we
see that: (i) the R-squared of the model increases substan-
tially with the inclusion of the individual fixed effects, which
shows that individual differences between customers explain a
significant portion of the variation in purchasing online ver-
sus offline conditional on purchase; and (ii) coefficient es-
timates for independent variables remain largely unchanged
in sign, significance, and magnitude. These results show that
while individual differences have a significant effect on chan-
nel choice decisions, the types of products customers prefer to
purchase online versus offline remain largely unchanged after
controlling for individual level differences. For this reason, in

60
B. Ratchford, G. Soysal and A. Zentner
our discussion below, we will use the within-customer estima-
tion results from columns II and IV (that include individual
level fixed effects in addition to time fixed effects).
The coefficient on product gender dummy for Brand B
(firm A only sells products designed for women) changes
when including or excluding individual fixed effects. The rea-
son for this is that since gender is a time-invariant individual
level characteristic, almost all customers of Brand B purchase
apparel and accessories either for men or for women, and very
few purchase products designed for both genders. As a result,
there is very little within-customer variation in this variable in
our data and thus it is not possible to empirically identify this
variable in the within-customer estimation (separately from
the individual fixed effect).
Estimation results reported in Columns II and IV of
Table 6 show that customers are more likely to choose the on-
line channel for their purchases when they live further away
from the closest physical store compared to when they live
closer. The results also show that, customers are more likely
to buy the more expensive items within each category online
compared to offline. The results reported in Column III of
Table 6 show that men’s apparel and accessory items are more
likely to be purchased online compared to women’s products
after controlling for cross-category differences. To understand
the differences in the types of products consumers prefer to
purchase online versus offline, we compare the estimation re-
sults reported in Table 6 for the different category dummies.
In our analyses, the Tabletop and Kitchenware category serves
as the base category (as the share of online purchases for this
category is very close to the overall share of online purchases
in our data) and the coefficients for all other category dum-
mies are estimated relative to this category. The results show
that compared to the base category, customers are more likely
to purchase products from the beauty and fragrance, seasonal
merchandise and gifts, apparel tops, apparel bottoms, dresses
and outerwear, and accessories categories in physical stores
and are more likely to purchase products from the intimate
apparel, jewelry, home décor/furnishings, furniture, and home
textiles categories online. The results are consistent across
the two brands. If we narrow our focus to apparel and acces-
sories categories, we see that apparel tops, bottoms, dresses,
and outerwear are more likely to be purchased in physical
stores compared to accessories, jewelry, and intimate apparel
items. Accessories, jewelry, and intimate apparel often have
more standardized features and are easier to assess for fit
compared to apparel.
These results are consistent with the widely held belief in
the literature (Betancourt et al. 2016; Chintagunta et al. 2012;
Lal & Sarvary 1999) and in practice that consumers prefer to
purchase products with important sensory attributes in a phys-
ical store when they need information on these attributes. In
general, apparel categories that consumers prefer to examine
for fit before purchase are more likely to be purchased of-
fline compared to non-apparel categories like home textiles
(e.g., tablecloths). Among the apparel categories, the intimate
apparel category that includes sleepwear, socks, tights, and
underwear is the easiest to assess for fit and is the one that is
61
Journal of Retailing 99 (2023) 46–65
most likely to be purchased online. Consumers may also feel
more comfortable to buy intimate apparel online compared
to other apparel due to social inhibitions or embarrassment
(Goldfarb et al. 2015). Also, men’s products, that have simpler
designs and are easier to assess for fit compared to women’s
(Pashigian and Bowen 1991; Soysal and Chintagunta 2020),
are more likely to be purchased online compared to women’s
products. Among the non-apparel categories, the beauty and
fragrance category is most likely to be bought online. Scent
of a product is a difficult attribute to communicate online,
and customers have a strong preference to purchase scented
products in physical stores after physically testing the sam-
ples. Another non-apparel category consumers are more likely
to purchase in stores (compared to the base category) is gifts
and seasonal merchandise that includes non-apparel gifts like
calendars or small toys, and seasonal merchandise like or-
naments. This finding is consistent with previous literature
(e.g., Balasubramanian et al. 2005) that has shown that gift
givers may prefer traditional channels over online channels
since greater personal involvement and effort associated with
the offline channel may imbue the purchased products with
greater symbolic meaning, and consequently greater utility.
Our analyses so far examined the relative popularity of
different types of products online and offline looking across
the entire sales curve. One might also wonder whether a sim-
ilar pattern is observed at the top of the sales curve, or in
other words within the top 100 best sellers online and of-
fline. For that purpose, we examined the composition of the
Top 100 lists for the online and offline channels to see what
types of products are likely to be among the best sellers on-
line versus offline. Remember that we allow the list of top
100 best sellers to vary at a monthly level to accommodate
possible changes in product popularity over time due to sea-
sonality and changes in assortment, and thus have twenty-four
top 100 product lists for both the online and offline channels
for each brand. Looking across these top 100 lists, we calcu-
lated what percent of the top 100 products come from each
category and compared the percentages across the online and
the offline channels. The results of these analyses are consis-
tent with the regression results from Table 6 discussed above.
For example, for Brand A, categories that are more likely to
show up among the most popular products offline compared
to online include beauty and fragrance (10.5% of the top 100
products offline vs. 3.0% online) and apparel tops (43% of-
fline and 31.2% online). Categories that are more likely to
show up among the most popular products online compared
to offline include home decor (3.8% offline vs. 9.5% online)
and home textiles (0.7% offline and 4.6% online).
We also present several additional analyses in the appendix
that show that the importance of sensory attributes creates a
divide in the types of products consumers prefer to purchase
online versus offline. In Appendix B.1.4 we show results from
a consumer survey we conducted with three different groups
of consumers and the results of these analyses are a consis-
tent with the results we report in Table 6 above and show
a strong negative correlation between the consumers’ percep-
tion of the importance of physical examination for a product
B. Ratchford, G. Soysal and A. Zentner
category and consumers’ likeliness to purchase that category
online. In Appendix B.1.6 we show results from examin-
ing consumers’ repeat purchases and show that when con-
sumers make repeated purchases of a specific product, they
learn about the product’s non-digital attributes with the first
purchase and this learning affects their channel choice deci-
sions for subsequent purchases, consistent with the model of
Lal and Sarvary (1999). Specifically, we show that the proba-
bility of choosing the online channel for the repeat purchases
is 32% (19%) higher for Brand A (B) compared to the initial
purchases.
Robustness examinations
We conducted a large number of additional examinations
that further demonstrate that cross-channel assortment dif-
ferences, customer heterogeneity, or other alternative mecha-
nisms do not explain the large product popularity differences
observed in our data. These alternative mechanisms therefore
cannot drive the observed long tail effects in our data. Due
to space limitations, we discuss these additional analyses in
the extended Online Appendix. Specifically, a) we conduct
analyses that demonstrate that assortment differences across
the online and offline channels (or across different types of
physical stores – such as those that are larger versus smaller,
or those that are located in colder versus warmer climates)
do not drive the observed long tail effects in our data; b) we
conduct analyses which suggest that the retailer’s marketing
campaigns (e-mail, catalog, and direct mail campaigns) do not
drive observed long tail effects in our data; c) we ran instru-
mental variable regressions using the entry of physical stores
during our study period as an instrument for channel choice
that show that our conclusions remain unchanged; and d) we
present the results from a survey we conducted, that, when
combined with other complementary analyses (cross-category
analysis and analysis examining repeat purchases), suggest
that the cross channel product popularity differences in our
data (which drive the long tail effects) arise from consumers
sorting their purchases into channels based on the physical
examination requirements of the products they will purchase.
The brands in our data sell products from three divisions
(apparel, accessories, and home furnishings) and there might
be differences in what a style represents across these divi-
sions. For this reason, in Appendix D we repeated our analy-
ses restricting our estimation sample to purchases of products
from the apparel division which is the main division. The
results from these analyses show that our conclusions are un-
affected when restricting our sample to apparel purchases. We
also replicated our analysis using data excluding all purchases
that are later returned (net demand), and the results show that
our concentration effect estimates are robust to the exclusion
of returns. To investigate the sensitivity of our results to cus-
tomer characteristics, we ran regressions analogous to those
in Table 5 but splitting the data by customer characteristics.
Specifically, we replicate our regressions using median splits
based on: (i) date of customers’ first purchase from each brand
(new vs. seasoned customers), (ii) dollar amount spent, (iii)
62
Journal of Retailing 99 (2023) 46–65
number of units purchased, and (iv) purchase frequency. We
also examined the sensitivity of our results splitting the data
for loyalty card owners and non-owners (only Brand A has a
loyalty card program). The results from all these split sample
regressions show that our concentration effect estimates are
robust across these various types of customer groups.
Conclusion
It is well known that the shift of consumers from offline
to online markets is fundamentally changing the type and va-
riety of products consumers purchase, but it is still unclear
how retailers should respond to these transformations. Us-
ing a unique individual-level panel dataset from two specialty
fashion goods retail brands that operate both brick-and-mortar
and online channels, we examine the extent to which overall
long tail effects are explained by consumers buying a greater
variety online compared to offline, versus consumers buying
different products online and offline. Our results show large
and statistically significant long tail effects in overall sales for
both brands. However, our results also show that the concen-
tration of sales online and offline is similar when we mea-
sure the concentration of sales separately in each channel.
Combining these results indicates that consumers do not buy
more variety when they move from the offline to the online
channel, but they buy different types of products to an extent
that creates wide cross channel product popularity differences.
While our results are consistent with the long tail prediction
of Anderson (2004) and others regarding the overall sales dis-
tribution, consumers sorting purchases into channels, and not
the other reasons argued in the literature, drive most of the
effects in our data.
These findings indicate that the evidence in the literature
that the Internet lowers search costs and facilitates the ac-
quisition of niche items needs to be qualified for fashion ap-
parel, and likely also for other goods that consumers prefer
to inspect prior to purchase. Moreover, recognizing the poten-
tial differences between the top selling products online versus
offline has implications that are relevant for the broader e-
commerce literature. Given the large differences in consumer
purchases online versus offline, our results suggest that in
the fashion goods industry at least, and presumably in other
markets as well, online sales of a product (or online sales
ranks) are not a good approximation for the sales in the of-
fline market or the entire market. Thus, it is problematic to
assume that sales rank data collected from online platforms
is representative of the entire market as has become a com-
mon practice in the e-commerce literature (e.g., Chevalier and
Goolsbee 2003). It is also problematic to test products in the
online channel before moving to full-scale distribution offline
(e.g., Finne and Sivonen 2009).
Consumers may change the products they purchase when
they shift from brick-and-mortar to online channels, and com-
panies need to correctly measure and predict these demand
changes when planning their business strategies. Our results
show that producers and retailers should be aware of the dif-
ferences in product popularity between the online versus of-
B. Ratchford, G. Soysal and A. Zentner
fline channels, and how these cross-channel product popu-
larity differences affect concentration, when designing their
strategies for channel assortment size and composition, or for
stocking in online versus offline channels. While our em-
pirical study focuses on the fashion goods category, where
sensory attributes create a divide between the products that
consumers prefer to purchase online versus offline, there are
a wide range of reasons why consumers might purchase
different products online versus offline. For example, prod-
uct popularity online and offline can differ due to cross-
channel assortment differences, differences in customer ex-
perience, differences in ability to transport the product, or
due to social inhibitions or embarrassment affecting how con-
sumers behave at physical stores versus online. Thus, exam-
ining the impact of cross-channel product popularity differ-
ences on the estimated long tail effects is essential for many
industries.
Our focal brands offer similar assortments online and of-
fline, which raises the question of whether our results would
generalize to other settings such as retailers that offer dif-
ferent assortments online and offline. In this regard, we note
that our specialty apparel retail brands carry a large selec-
tion of apparel and other product categories from different
brands in addition to their own brands. If other retailers, such
as a department store, carry a much larger assortment on-
line compared to offline, then this would provide an addi-
tional reason for why consumers would sort their purchases
across channels. In this way, our estimates represent a lower
bound of the amount of sorting of purchases across chan-
nels and of how this sorting can affect the measurement of
the long tail effects. In addition, our study examines long tail
effects within the context of an omnichannel retailer that oper-
ates both online and offline channels (similar to other studies
like Zentner et al. (2013) and Brynjolffson, Hu and Simester
(2011)). We note that results and conclusions can be different
when examining long tail effects within a retailer versus the
whole market, in particular because selection might be sub-
stantially different online versus offline when considering the
whole market.
Studying discrepancies in what consumers purchase online
versus offline, and how the concentration of sales changes
when consumers transition to the online marketplaces, is not
only important for the academic literature but also important
for managerial practice. In contrast to recommendations from
the previous literature, our results show that fashion apparel
retailers do not need to offer much broader assortments online
compared to offline, but they may find it profitable to carry
or emphasize a different product mix online compared to of-
fline. A similar recommendation was provided in the grocery
setting by Chintagunta et al. (2012), who recommended that
retailers may carry more varieties of heavy/bulky items online
and more varieties of perishables offline. The distinction be-
tween offering a much larger assortment online versus offer-
ing/emphasizing a different product mix online compared to
offline can have important implications for the fashion goods
retailer’s overall performance. While offering a much larger
assortment online is almost costless for retailers of digital
63
Journal of Retailing 99 (2023) 46–65
goods like movies, books, or music, offering a much larger
assortment online would be costly for a specialty fashion ap-
parel due to two main reasons. First, for each fashion apparel
item in its assortment, the retailer needs to carry a sufficient
inventory of multiple sizes and colors. Second, fashion prod-
ucts are perishable due to the seasonality of products (e.g.,
swimsuits or Christmas dresses) and the fast pace of change
in fashions over time, and as a result the retailer needs to al-
most completely replace their assortment every three-to-four
months (Lal and Sarvary 1999).
Our analysis examining what products customers prefer to
purchase online versus offline provides clues on how fash-
ion apparel retailers can carefully curate their online and of-
fline assortments. The retailers might find it more profitable to
emphasize products with important sensory attributes like fra-
grances, and apparel tops and bottoms (that consumers like to
try on for fit before purchase) in their offline assortments and
emphasize products with fewer sensory attributes like home
textiles, socks/tights (easier to assess for fit compared to ap-
parel tops or bottoms), or heavy/bulky items like furniture in
their online assortments. Online assortments can also empha-
size men’s apparel and accessories (compared to women’s)
and more expensive items within each category.
We note that our focal fashion goods retail brands ex-
ercise uniform (integrated, aligned) assortments (and prices)
across the online and offline channels, as is customary in
specialty fashion goods retailing. As discussed earlier, previ-
ous research has shown that in the grocery context, where
online assortments are typically smaller than offline assort-
ments, maintaining a similar assortment online and offline
might benefit the retailer since it allows consumers to rely on
their offline experiences when shopping online. Thus, before
setting cross-channel assortment strategies, fashion goods re-
tailers should weigh the potential benefits from aligning the
online and offline assortments (which might exist due to learn-
ing effects and avoiding consumer confusion) against the po-
tential benefits from curating their online and offline assort-
ments based on products customers prefer to purchase online
versus offline (which might simplify product choice and in-
crease purchase probability conditional on channel choice).
If at the end, the retailers find it profitable to align the on-
line and offline assortments, they might still benefit from em-
phasizing different product mixes in stores versus online us-
ing marketing tools (such as special displays, product place-
ment, recommendation engines) or carry larger inventories
of different products online versus of offline based on our
findings.
We also note that our recommendations are based on cus-
tomers’ cross-channel purchase preferences in our data. As-
sortment planning should yet weigh not only demand, but
also the associated cost considerations (e.g., product develop-
ment, logistics, distribution costs). Because of the short prod-
uct lifecycles, product development costs are very pronounced
in this market and might be prohibitive to carry much larger
online assortments unlike in other markets where products
have longer lifecycles (e.g., entertainment goods like books
or music, or durable goods). Future research might benefit
B. Ratchford, G. Soysal and A. Zentner
from detailed data on costs associated with offering a certain
level of assortment online versus offline.
In order to better integrate their channels and improve cus-
tomer experience, retailers in the recent years have been im-
plementing various omnichannel management strategies like
allowing customers to examine store inventories online, al-
lowing customers to buy online and pick up in store (e.g.,
Gao and Su 2017; Gallino and Moreno 2014); or shipping
online orders from stores (Bayram and Cesaret 2020). Future
research might also benefit from empirically examining the
impact of such strategies on what consumers buy online ver-
sus offline, on the concentration of sales, and on the retailers’
assortment and inventory management strategies.
One limitation of our study is that our data come from
a period where both retail brands had operated their online
channels (in addition to their widespread networks of brick-
and-mortar stores) for several years. Thus, we do not have the
opportunity to observe the introduction of the online channel
and the transition of the customers from the offline channel
to a multi-channel context. This limits our ability to answer
questions like which customers adopt the online channel in
the time period immediately following the addition of the on-
line channel, or when and how they shift their purchases from
the offline to the online channel. Our insights, rather, stem
from examining the differences in consumer purchase behav-
ior across the online and offline channels between and within
customers in the fashion goods market with the aim of under-
standing: (i) how the growth of the online channel impacts the
concentration of sales, and (ii) the mechanism and underlying
consumer cross-channel purchase behavior pattern driving the
change in the concentration of sales. Future research might
benefit from empirically examining the immediate impact of
adding an online channel on consumer’s overall and offline
purchase behaviors.
Supplementary materials
Supplementary material associated with this article can be
found, in the online version, at doi:10.1016/j.jretai.2022.06.
007.
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