Why Are Born-Digital Retailers Expanding Offline?

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With the advent of digitalization in the retail industry, brick-and-mortar dominance has been challenged. The digital channels are becoming increasingly competitive, and thanks to a wide use of data can create a perfectly tailored customer experience. However, while everything seems to go digital, some digital-born companies are expanding their business offline. This master’s thesis explores the relatively new phenomenon of online-born retailers that decides to open physical channels. The study focuses on understand the reasons behind this decision, and the impact that this can have on the customer journey and on the business model. It investigates the phenomenon by analysing the relevant literature on this and on related topics such as digitalization and customer centricity, and through a multiple case study. The data for the multiple case study were collected through semi-structured interviews and publicly available information. The results suggest that there are three main reasons why companies expand offline: for marketing purposes, to target a new customer segment and/or to expand in new markets and to take advantage of cross-channel synergies. It also appears that the customer journey is mainly impacted in the first phase, when customers search for information about the brand and the products. The reason lies in the possibility to engage face-to-face with the company’s employees, have a pleasant offline experience and physically interact with the products. Lastly, the research confirms that the business model can be also affected by the decision to expand offline, particularly in terms of customer relationships, targeted customer segments, and partnerships.