Lite app adoption and cannibalisation

Over the past few years, firms have increasingly adopted mobile applications (ie apps) to reach and serve their customers. More recently, the trend for simplified versions of these apps (ie lite apps) has been growing. To date, little is known about how the adoption of lite apps affects customer usage across different online channels. To address this gap in the literature, this study conducts empirical analysis to examine whether the adoption of a new lite app increases or cannibalises customer spending/transactions on a company’s existing app and across all channels. Econometric analysis is performed using a unique dataset obtained from an online platform where merchants offer daily deals to their customers. The market shock induced by the platform’s introduction of a lite app provides an opportunity to examine customers’ adoption and usage of a lite app. The difference-in-differences models coupled with dynamic propensity score matching reveal that the lite app channel cannibalises the original app channel. Moreover, the lite app adoption does not improve existing customers’ total contribution across all online channels. These findings provide important implications for firms to manage mobile apps effectively.