Should a small-sized store have both online and offline channels? An efficiency analysis of the O2O platform strategy

Abstract

The emergence of online-to-offline (O2O) has been changing the business environment of the retail industry and making businesses more competitive. Since the relationship between O2O and productivity is of interest, this study examines whether adoption of the O2O platform is effective in improving the efficiency of small-sized online stores. A two-stage approach consisting of stochastic frontier analysis and meta-frontier analysis is applied to estimate and compare the efficiencies between firms using the O2O platform and firms using other methods. Based on stochastic frontier analysis and meta-frontier analysis, our findings show that adopting the O2O platform is an innovative and competitive strategy for small-sized online stores.