Optimizing Multichannel Strategies: A Balanced Approach

In recent years, manufacturers have progressively embraced multichannel strategies to synchronize online and offline channels, thereby catering to a diverse customer base (Verhoef, Kannan, and Inman 2015). This transition, however, has sparked a critical debate on the extent to which product assortments should be differentiated across these channels. Traditional marketing theories propose such differentiation to prevent channel cannibalization and satisfy distinct consumer preferences inherent to different channels, underlining the convenience of online shopping versus the experiential aspect of offline shopping (Montoya-Weiss et al., 2003; Fürst, Leimbach, and Prigge 2017).

However, an increase in product assortment differentiation could engender misaligned interests, escalating competition and potentially reducing sales performance, as evidenced by cases like Adidas in 2020 (Dahlquist and Griffith 2014; Adidas 2021). Currently, although a vast majority of marketers acknowledge the importance of maintaining both online and offline channels, only a few organizations believe that they have successfully implemented this strategy (Hadfield 2019).

To address this ongoing debate, our study introduces the concept of Online and Offline Product Assortment Differentiation (OOPD), which we define as the percentage of products exclusively available on either online or offline channels relative to the total non-duplicated product offerings across both platforms. The goal of this study is to elucidate the effects of increased product differentiation on manufacturers' performance, and to pinpoint the conditions that encourage synergy and enhance net sales benefits across various brand categories. By analyzing a substantial dataset pertaining to home appliance brands in China, we identified an inverted U-shaped relationship between OOPD and brand category sales performance. This suggests an optimum performance level at a 58.8% differentiation rate, where the effects vary subtly depending on the brand's power and the characteristics of channel ownership. This research significantly contributes to the broader understanding of product assortment decisions within multichannel management frameworks, underlining the pivotal role of OOPD, especially for emerging or less dominant brands aiming to expand their market share.