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How Does Web Personalization Create Value for Online Retailers? Lower Cash Flow Volatility or Enhanced Cash Flows

Journal of retailing, 2018-09, Vol.94 (3), p.265-279 [Peer Reviewed Journal]

2018 New York University ;Copyright New York University Sep 2018 ;ISSN: 0022-4359 ;EISSN: 1873-3271 ;DOI: 10.1016/j.jretai.2018.05.001

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  • Title:
    How Does Web Personalization Create Value for Online Retailers? Lower Cash Flow Volatility or Enhanced Cash Flows
  • Author: Kalaignanam, Kartik ; Kushwaha, Tarun ; Rajavi, Koushyar
  • Subjects: Cash flow forecasting ; Cash flow volatility ; Customization ; Financial services ; Market-to-book ratio ; Marketing-finance interface ; Price premium ; Retail strategy ; Stockholders ; Studies ; Trust ; Volatility ; Web personalization ; Web sites
  • Is Part Of: Journal of retailing, 2018-09, Vol.94 (3), p.265-279
  • Description: [Display omitted] •Web personalization increases shareholder value.•Web personalization reduces firms’ cash flow volatility.•Online trust positively moderates the aforementioned relationships.•Web personalization enables firms with high online trust to charge premium prices.•Cash flow volatility is driven by lower churn. This study examines the performance consequences of web personalization (WP), a type of personalization in which web content is personalized and recommendations are offered based on customer preferences. Despite the growing popularity of personalization, there is a dearth of research at the firm level on whether and how web personalization creates shareholder value. We develop and test a conceptual model that proposes that the impact of WP on shareholder value is mediated by (1) cash flow volatility and (2) premium price. The hypotheses are tested based on 603 firm-quarter observations spanning 80 firms over six years in the online financial services industry. The results suggest that while WP lowers the volatility of cash flows, it only enables firms to charge premium prices when online trust is high. Additional tests reveal that the reduction in cash flow volatility is because of lower churn as opposed to acquiring new customers or greater cross-buying. Finally, online trust positively moderates the relationships between WP and cash flow volatility and price premia. Practical implications of the findings are discussed.
  • Publisher: Greenwich: Elsevier Inc
  • Language: English
  • Identifier: ISSN: 0022-4359
    EISSN: 1873-3271
    DOI: 10.1016/j.jretai.2018.05.001
  • Source: ProQuest One Psychology
    ProQuest Central
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