Mobile App Adoption and Its Differential Impact on Consumer Shopping Behavior

Abstract

The mobile application (app) market is one of the fastest growing markets in recent years. In this study, we investigate how app adoption changes customers’ hotel booking behaviors using a dataset of around 16,000 randomly selected customers’ hotel booking and stay information from one of the largest hotel chains in China. Our analyses find that customer purchase frequency and total sales increased after app adoption. Additional investigation shows that customers’ search behaviors also evolved post‐adoption. Specifically, customers tended to book rooms earlier and select options with less discount, which indicates that app users reduced their search intensity after app adoption. We further investigate the differential impact of mobile app adoption on sales, taking into account consumer heterogeneity in price sensitivity and purchase frequency. We find that both price‐sensitive and ‐insensitive customers increased the number of bookings, and they tended to book earlier post‐adoption. Furthermore, price‐sensitive customers on average booked more expensive rooms with less discount after app adoption, suggesting that these customers likely decreased their search effort. In terms of hotel stay frequency, app adoption increased low‐frequency customers’ purchase frequency but did not have any significant effect on high‐frequency customers. These analyses provide a more nuanced view of how mobile apps change consumer search and purchase behaviors. Our findings have important managerial implications. With a better understanding of customer behaviors, firms can provide incentives to customers who are more likely to be affected by mobile app adoption.

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