Investigating the Omnichannel Synergy in Platform Omnichannel Business.

E-commerce platforms have a great potential in excavating values in omnichannel business operations. For platform-based retailers to enter the omnichannel business, franchising is a convenient operational model that enables fast expansion of offline store with low costs. Yet, there are challenges in quality control, and the economic outcomes of franchising in omnichannel business is unknown. Moreover, the large variety of product categories with different attributes on the platforms may render disparate synergies between online and offline channels. We investigate the business outcomes of a major e-commerce platform entering the omnichannel business through franchising offline stores, and analyze the differentiated effect of various product categories. Empirical results suggest that establishing franchise-based offline channel exerts greater substitution effect on the online channel, especially for perishable and experiential products. There are potentially complementary effects for heavy, durable products. We discuss the omnichannel synergy and provide implications for platforms and retailers.