Customers' Choice between Online or Offline Channel about Search Products, Experience Products and Credence Products

This study aims to find out customers’ decisions between online or offline channel about search products, experience products and credence products. For this purpose, we analyzed 120 volunteers with 5 experiments, to verify 6 hypotheses. We summarized traditional online and offline channel theory and tried to research this topic in five aspects, which are website design, offline shop distance, customer group selection, media publicity and offline channel’s help for online. According to the results of 5 experiments, we finally find out customer’s choice between online and offline channel influenced by the category of products and 5 different factors. Besides, we also offer some suggestions about how to attract customers from offline channel to online channel.


Introduction
During the speed development of O2O business, more and more customers go shopping online, instead of the tradition way.As online and offline shops become two available choices for the customers, it's necessary to know their preference between the two channels under different conditions.
The category of products is the most important element to influence customer choice between online and offline channel.As Nelson (1970Nelson ( , 1974)), Darby and Karni (1973) said, we classify products into 3 types, search products, experience products and credence products.Every type has its own characteristic, which will lead to different shopping environment requirements for the consumers.This environment can be shopping location or interpersonal environment, like shopping alone or with friends.
Previous references did research about each factor alone, but never made a general analysis about all the influence factors.Our study tries to summarize all kinds of influence factors and do some empirical test.
We have organized the remainder of this article as follows.Part 2 provides a literature review and the research background.Part 3 describes the hypotheses.Part 4 explains the experiments and methodology.Part 5 summarizes the results.buyers are even more interested in offline shop than experience products buyers, because they want more products information than others.Originally, there are two kinds of people, one enjoys social contact and the other fears it.Someone chooses online shopping because of their fear of social contact.However, shopping with friends or relatives will give people familiarity feeling, which will ease the feeling of fear about social contact.
Media publicity is a popular research field.In the long term, the introduction of news internet will reduce the sales of offline shop but will increase the average sale of all goods including online or offline channel.In other words, media publicity will guide consumers to online channel, because they can acquire products information from the media.Although some of the customers turn to online channel, the total sales will be higher because the average sale of all goods increases.(Koen Pauwels, Peter S.H. Leeflang, Marije L. Teerling and K.R. Eelko Huizingh, 2011) Internet word of mouth has a significant influence on consumers' perceived trust for the products, and bad word of mouth will have a punishment effect on products sales.The influence of word of mouth on trust will be more obvious before than after interaction with consumers.If the merchant wants to attract customers, they should keep a good product image before the interaction with them.(Gee-Woo Bock， Jumin Lee， Huei-Huang Kuan and Jong-Hyun Kim, 2012) Online information from different group will have different influence on search products and experience buyers.For experience products buyers, online information from customers will be more important.However, for search products buyers, online information from retailers and suppliers will be more significant.Besides, the neutrality of the website will be an important factor for experience consumers.Generally speaking, if online shops want to attract customers to buy experience products, they should keep good internet word of mouth from a neutral website.(Lien-Ti Bei, Etta Y. I. Chen and Richard Widdows, 2004) Consumers will choose a different complaint channel in an online shopping environment than in an offline shopping environment, and there will be an interaction between the purchase environment and the consumer's degree of dissatisfaction ( Seul Lee & Brenda J. Cude, 2011) Social media will influence the search products and experience products consumers significantly.(Jeen-Su Lim, Abdulrahman Al-Aali, & John H. Heinrichs, 2015) Offline channel's help for online is known as that the perceived offline service quality of customers will have a positive influence on online consumption.If consumers can feel good perceived service quality in the offline experience shop, they online consumption will increase as well.(Shuiqing Yang, Yaobin Lu, Ling Zhao and Sumeet Gupta, 2011) Customers' past shopping experience will be important to their future judgment.(Stephen J. Hoch, 2002)

Hypotheses
According to the literature part, when online and offline channel compete with each other, there will be 5 different factors, calling website design, offline shop distance, customer group selection, media publicity and offline channel's help for online.
Besides, the influence those 5 factors have on consumers' decisions will vary with different kinds of products.Search products, experience products and credence products will make a difference to the influence.

Website Design
According to the literature, consumers will choose simple and easy process when they buy search products.When considering the decision for experience products, complicated information and process on the website will be less disgusted, so the simplicity of website is not very important for them.Credence products consumers will be willing to accept complex process online and get more information for the products, so simplicity is also not attractive to them.(Raquel Chocarro and Mónica Cortinas, 2013) As a result, we can make the hypothesis 1 that: H1.The simpler the online shopping process is, the more possible the customers will use online channel.
H1a.For search products, the simpler the online shopping process is, the possibility of the customers to use online channel will be much higher.
H1b.For experience products, the simpler the online shopping process is, the possibility of the customers to use online channel will not increase significantly.
H1c.For credence products, the simpler the online shopping process is, the possibility of the customers to use online channel will not increase significantly.

Offline Shop Distance
Naturally, customers will prefer offline shop in short distance.If the distance is too long, some of them will choose online channel, especially for the search products consumers who can easily know the performance and quality of products.Experience products customers are not so easy to know the information about the products, so offline shop will be convenient to get more details.Consumers for credence products will not feel a big difference between online channel and offline channel, because even if the offline shop cannot let them know the products well.(Raquel Chocarro, Mónica Cortinas and María-Luisa Villanueva, 2013) So we can have the hypothesis 2 that: H2.The longer the distance of the offline shop is, the more likely the customers will use online channel.
H2a.For search products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will be much higher.
H2b.For experience products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will not increase significantly.
H2c.For credence products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will almost stay the same.

Customer Group Selection
Consumers are usually divided into two kinds, calling social active and social phobia consumers.Social active consumers enjoy communicating with people, so they will like offline shopping.However, social phobia consumers dislike communication, which means that they will prefer online channel.
When social active consumers and social phobia consumers make the decision of search products, experience products or credence products, their choice will not be the same.For example, shopping with friends or relatives will reduce their fear for social communication, especially for social phobia consumers, but this effect will not be quite obvious for social active consumers.(Raquel Chocarro, Mónica Cortinas and María-Luisa Villanueva, 2013) To study the difference between two kinds of consumers when they shopping with friends or relatives, we design hypothesis 3 and hypothesis 4: H3.Social active consumers prefer offline channel.
H3a.For search products, when shopping with friends or relatives, the possibility of social active customers to use online channel will not change a lot.
H3b.For experience products, when shopping with friends or relatives, the possibility of social active customers to use online channel will be lower.
H3c.For credence products, when shopping with friends or relatives, the possibility of social active customers to use online channel will be even lower than experience products consumers.H4.Social phobia consumers prefer online channel.
H4a.For search products, when shopping with friends or relatives, the possibility of social phobia customers to use online channel will be lower.
H4b.For experience products, when shopping with friends or relatives, the possibility of social phobia customers to use online channel will be even lower than search products consumers.
H4c.For credence products, when shopping with friends or relatives, the possibility of social phobia customers to use online channel will be even lower than experience products consumers.

Media Publicity
Internet word of mouth has a significant influence on consumers' perceived trust for the products, and bad word of mouth will have a punishment effect on products sales.Internet word of mouth is quite important, because it can leave a good impression on consumers' mind.(Gee-Woo Bock，Jumin Lee，Huei-Huang Kuan and Jong-Hyun Kim, 2012) The neutrality of the website will be an important factor for experience consumers.(Lien-Ti Bei, Etta Y. I. Chen and Richard Widdows, 2004) Social media will influence the search products and experience products consumers significantly.(Jeen-Su Lim, Abdulrahman Al-Aali, & John H. Heinrichs, 2015) Based on the literature above, we can hypothesis 5 that: H5.Good word of mouth and publicity from neutral media and websites will increase long-term sales of online channel.
H5a.For search products, good word of mouth and publicity from neutral media and websites will not make a big improvement in long-term sales of online channel.
H5b.For experience products, good word of mouth and publicity from neutral media and websites will make a big improvement in long-term sales of online channel.
H5c.For credence products, good word of mouth and publicity from neutral media and websites will make a big improvement in long-term sales of online channel, but the improvement will be less than in experience products.

Offline Channel's Help for Online
As the literature tells us, offline channel can help the online channel by a positive effect on online consumption from the perceived offline service quality of customers.If consumers can feel good perceived service quality in the offline experience shop, they online consumption will increase as well.(Shuiqing Yang, Yaobin Lu, Ling Zhao and Sumeet Gupta, 2011) Customers' past shopping experience will be important to their future judgment.(Stephen J. Hoch, 2002) We have hypothesis 6 that: H6.The higher the perceived offline service quality of customers is, the more likely that the customers will consume online.
H6a.For search products, the higher the perceived offline service quality of customers is, the more likely that the customers will consume online.
H6b.For experience products, the higher the perceived offline service quality of customers is, the more likely that the customers will consume online, and the possibility will be even higher than search products.
H6c.For credence products, the higher the perceived offline service quality of customers is, the possibility of customers' online consumption will not increase significantly.

Experiments and Methodology
To test the 6 hypotheses above, we design 5 experiments.We choose all the volunteers during 20-25 years old university students.About half of the volunteers are male and the other half are female.The experiments were done in December, 2015.

Experiment 1
Experiment 1 is a 3×2 design, to test hypothesis 1.We chose 120 volunteers, who were divided into 6 teams, each with 20 volunteers.Then we let them shop on two designed websites, one is a simple and direct shopping website, the other is a complicated website including a lot of products information before shopping.60 volunteers used the first website, the other 60 volunteers used another.One third of each 60 volunteers would buy search products, one third would buy experience products, and the last one third would choose credence products.The result of the 6 teams is shown below: By comparing team A and team B, team C and team D, team E and team F, we can see the differences of the possibility of shopping online or offline, then we can test hypothesis 1.
By comparing the difference of the possibility of shopping online or offline in team A and team B, we can test hypothesis 1a.
By comparing the difference of the possibility of shopping online or offline in team C and team D, we can test hypothesis 1b.
By comparing the difference of the possibility of shopping online or offline in team E and team F, we can test hypothesis 1c.

Experiment 2
Experiment 2 is a 3×2 design, to test hypothesis 2. We chose 120 volunteers, who were divided into 6 teams, each with 20 volunteers.Then we let them choose online or offline channel to buy products.The online channel is a simple website, on which you could consume directly.Half of the volunteers were told that the offline shop was quite far away, while the other half of the volunteers were given a short-distance shop.One third of each 60 volunteers would buy search products, one third would buy experience products, and the last one third would choose credence products.The result of the 6 teams is shown below: By comparing team A and team B, team C and team D, team E and team F, we can see the differences of the possibility of shopping online or offline, then we can test hypothesis 2.
By comparing the difference of the possibility of shopping online or offline in team A and team B, we can test hypothesis 2a.
By comparing the difference of the possibility of shopping online or offline in team C and team D, we can test hypothesis 2b.
By comparing the difference of the possibility of shopping online or offline in team E and team F, we can test hypothesis 2c.

Experiment 3
Experiment 3 is a 3×2 ×2 design, to test hypothesis 3 and hypothesis 4. We chose 120 volunteers, who were divided into 12 teams, each with 10 volunteers.Then we let them choose online or offline channel to buy products.Half of them are social active consumers and half are social phobia consumers.One third of each 60 volunteers would buy search products, one third would buy experience products, and the last one third would choose credence products.Every kind of consumers for search products, experience products and credence products was divided into 2 parts, one made decisions alone, the other went shopping with their friends or relatives.The result of the 12 teams is shown below: By comparing team A and team G, team B and team H, team C and team I, team D and team J, team E and team K, team F and team L, we can see the differences of the possibility of shopping online or offline, then we can test hypothesis 3.
By comparing the difference of the possibility of shopping online or offline in team A and team D, we can test hypothesis 3a.
By comparing the difference of the possibility of shopping online or offline in team B and team E, we can test hypothesis 3b.
By comparing the difference of the possibility of shopping online or offline in team C and team F, we can test hypothesis 3c.
By comparing team A and team G, team B and team H, team C and team I, team D and team J, team E and team K, team F and team L, we can see the differences of the possibility of shopping online or offline, then we can test hypothesis 4.
By comparing the difference of the possibility of shopping online or offline in team G and team J, we can test hypothesis 4a.
By comparing the difference of the possibility of shopping online or offline in team H and team K, we can test hypothesis 4b.
By comparing the difference of the possibility of shopping online or offline in team I and team L, we can test hypothesis 4c.

Experiment 4
Experiment 4 is a 3×2 ×2 design, to test hypothesis 5. We chose 120 volunteers, who were divided into 12 teams, each with 10 volunteers.One third of each 60 volunteers would buy search products, one third would buy experience products, and the last one third would choose credence products.All the consumption behaviors were online, which would be influenced by good word of mouth and publicity from neutral media and websites.The result of the 12 teams is shown below: By comparing team A and team B, team A and team C, team E and team F, team E and team G, team I and team J, team I and team K, we can see the differences of the possibility of shopping online, then we can test hypothesis 5.
By comparing the difference of the possibility of shopping online or offline in team A and team B, team A and team C, we can test hypothesis 5a.
By comparing the difference of the possibility of shopping online or offline in team E and team F, team E and team G, we can test hypothesis 5b.
By comparing the difference of the possibility of shopping online or offline in team I and team J, team I and team K, we can test hypothesis 5c.

Experiment 5
Experiment 5 is a 3×2 design, to test hypothesis 6.We chose 120 volunteers, who were divided into 6 teams, each with 20 volunteers.One third of each 60 volunteers would buy search products, one third would buy experience products, and the last one third would choose credence products.
Before they made the online shopping decisions, we would let them experience in the offline experience shop firstly.Half of them would enjoy high quality service, while the other half would experience normal service.The result of the 6 teams is shown below: By comparing team A and team B, team C and team D, team E and team F, we can see the differences of the possibility of shopping online, then we can test hypothesis 6.
By comparing the difference of the possibility of shopping online or offline in team A and team B, we can test hypothesis 6a.
By comparing the difference of the possibility of shopping online or offline in team C and team D, we can test hypothesis 6b.
By comparing the difference of the possibility of shopping online or offline in team E and team F, we can test hypothesis 6c.

Data an
We test all

Test 1
As we hav     ing all the 3 r s prefer offline e products and s do the t-test r ee that the dat oducts, when sh ill be lower.y the customers will use online channel.For search products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will be much higher.For experience products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will not increase significantly.For credence products, the longer the distance of the offline shop is, the possibility of the customers to use online channel will almost stay the same.
If all the other factors stay the same, customers will choose nearby offline shop.(Raquel Chocarro, Mónica Cortinas and María-Luisa Villanueva, 2013) However, for experience products consumers and credence products consumers, offline shop experience is a necessary step, because they cannot know the performance and quality without experiencing.
3. Customer group selection: On the whole, social active consumers prefer offline channel, while social phobia consumers prefer online channel.For search products, when shopping with friends or relatives, the possibility of social active customers to use online channel will not change a lot, while the possibility of social phobia customers to use online channel will be lower.For experience products, when shopping with friends or relatives, the possibility of social active customers to use online channel will be lower, while the possibility of phobia customers to use online channel will be even lower than search products consumers.For credence products, when shopping with friends or relatives, the possibility of social active customers to use online channel will be even lower than experience products consumers, while the possibility of social phobia customers to use online channel will be even lower than experience products consumers.
Social active consumers naturally prefer offline channel, so shopping with friends or relatives will not make a difference.For experience products, social active consumers have necessary need for offline shop experience.
For credence products, social active consumers will feel more happiness in offline shop than experience products, because the staffs' introduction can help them know the products better.
Social phobia consumers prefer online channel, but shopping with friends or relatives will reduce their fear of social communication, which can improve their willingness to offline shop.For experience products consumers, this effect will be more significant, because it's difficult for them to judge the performance of products if they don't go to the offline shop.While the effect will be even more obvious for credence products consumers, who have more need for products details.
4. Media publicity: For search products, good word of mouth and publicity from neutral media and websites will not make a big improvement in long-term sales of online channel.For experience products, good word of mouth and publicity from neutral media and websites will make a big improvement in long-term sales of online channel.For credence products, good word of mouth and publicity from neutral media and websites will make a big improvement in long-term sales of online channel, but the improvement will be less than in experience products.
Objectively, good word of mouth and publicity from neutral media and websites will increase long-term sales of online channel.(Koen Pauwels, Peter S.H. Leeflang, Marije L. Teerling and K.R. Eelko Huizingh, 2011) However, people can judge the quality and performance of search products easily, so the influence of word of mouth and publicity from neutral media and websites will not be very obvious for search products.For experience products and credence products consumers, making this judgment will be difficult.As a result, word of mouth and publicity from neutral media and websites will be more important.For credence products consumers, word of mouth and publicity from neutral media and websites are not enough, so the effect will be not as significant as experience products.
5. Offline channel's help for online: The higher the perceived offline service quality of customers is, the more likely that the customers will consume online.For search products, the higher the perceived offline service quality of customers is, the more likely that the customers will consume online.For experience products, the higher the perceived offline service quality of customers is, the more likely that the customers will consume online, and the possibility will be even higher than search products.For credence products, the higher the perceived offline service quality of customers is, the possibility of customers' online consumption will not increase significantly.
Generally speaking, if consumers can feel good perceived service quality in the offline experience shop, they online consumption will increase as well.(Shuiqing Yang, Yaobin Lu, Ling Zhao and Sumeet Gupta, 2011) While for the experience products consumers, offline experience will be very helpful for them to know the products performance, so this effect on online consumption is more significant.However, for credence products consumers, even if they feel good perceived service quality in the offline shop, they will not likely choose online channel, because it is far away from their natural preference.