IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v254y2022ics0925527322001918.html
   My bibliography  Save this article

Omnichannel retail operations with mixed fulfillment strategies

Author

Listed:
  • Yang, Lu
  • Li, Xiangyong
  • Zhong, Ning

Abstract

Many retailers are implementing omnichannel (OC) strategies including buy online, pick up in store (BOPS), buy online, ship from store (BOSS) and buy online, ship to store (STS). We study the impact of mixed fulfillment OC strategies (e.g., BOPS-STS, BOSS-BOPS-STS) on the retailer’s store operations. We build a stylized model where the retailer operates both a physical store and online channels, and faces two segments of customers: fixed-channel customers and OC-type customers. We find that both BOPS-STS and BOSS-BOPS-STS may induce customers to shift fulfillment options for time-insensitive or experience products when pickup hassle cost is low. In addition, both BOPS-STS and BOSS-BOPS-STS can expand the market for time-sensitive or experience products. We show that BOSS-BOPS-STS may increase the retailer’s optimal inventory level for time-sensitive or experience products when in-store hassle cost is high, and will decrease the optimal inventory level for time-insensitive or non-experience products when both pickup and in-store hassle costs are low. These two mixed strategies may increase or reduce the retailer’s profits, depending on whether they drive effects of option shift and market expansion and whether their fixed costs exceed certain thresholds. Finally, we find that different OC strategies interact and their effects on the retailer’s store operations and customers’ channel choices vary across product types.

Suggested Citation

  • Yang, Lu & Li, Xiangyong & Zhong, Ning, 2022. "Omnichannel retail operations with mixed fulfillment strategies," International Journal of Production Economics, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:proeco:v:254:y:2022:i:c:s0925527322001918
    DOI: 10.1016/j.ijpe.2022.108608
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527322001918
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2022.108608?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Jie & Farris, Paul W. & Irvin, John W. & Kushwaha, Tarun & Steenburgh, Thomas J. & Weitz, Barton A., 2010. "Crafting Integrated Multichannel Retailing Strategies," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 168-180.
    2. Siawsolit, Chokdee & Gaukler, Gary M., 2021. "Offsetting omnichannel grocery fulfillment cost through advance ordering of perishables," International Journal of Production Economics, Elsevier, vol. 239(C).
    3. MacCarthy, Bart L. & Zhang, Lina & Muyldermans, Luc, 2019. "Best Performance Frontiers for Buy-Online-Pickup-in-Store order fulfilment," International Journal of Production Economics, Elsevier, vol. 211(C), pages 251-264.
    4. Santiago Gallino & Antonio Moreno, 2014. "Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information," Management Science, INFORMS, vol. 60(6), pages 1434-1451, June.
    5. Neslin, Scott A., 2022. "The omnichannel continuum: Integrating online and offline channels along the customer journey," Journal of Retailing, Elsevier, vol. 98(1), pages 111-132.
    6. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    7. Verhoef, Peter C. & Kannan, P.K. & Inman, J. Jeffrey, 2015. "From Multi-Channel Retailing to Omni-Channel Retailing," Journal of Retailing, Elsevier, vol. 91(2), pages 174-181.
    8. Gauri, Dinesh K. & Jindal, Rupinder P. & Ratchford, Brian & Fox, Edward & Bhatnagar, Amit & Pandey, Aashish & Navallo, Jonathan R. & Fogarty, John & Carr, Stephen & Howerton, Eric, 2021. "Evolution of retail formats: Past, present, and future," Journal of Retailing, Elsevier, vol. 97(1), pages 42-61.
    9. Gupta, Vishal Kumar & Ting, Q.U. & Tiwari, Manoj Kumar, 2019. "Multi-period price optimization problem for omnichannel retailers accounting for customer heterogeneity," International Journal of Production Economics, Elsevier, vol. 212(C), pages 155-167.
    10. Fei Gao & Xuanming Su, 2017. "Online and Offline Information for Omnichannel Retailing," Manufacturing & Service Operations Management, INFORMS, vol. 19(1), pages 84-98, February.
    11. Raymond Deneckere & James Peck, 1995. "Competition Over Price and Service Rate When Demand is Stochastic: A Strategic Analysis," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 148-162, Spring.
    12. Jindal, Rupinder P. & Gauri, Dinesh K. & Li, Wanyu & Ma, Yu, 2021. "Omnichannel battle between Amazon and Walmart: Is the focus on delivery the best strategy?," Journal of Business Research, Elsevier, vol. 122(C), pages 270-280.
    13. Rong Li, 2020. "Reinvent Retail Supply Chain: Ship‐from‐Store‐to‐Store," Production and Operations Management, Production and Operations Management Society, vol. 29(8), pages 1825-1836, August.
    14. Shi, Xiutian & Dong, Ciwei & Cheng, T.C.E., 2018. "Does the buy-online-and-pick-up-in-store strategy with pre-orders benefit a retailer with the consideration of returns?," International Journal of Production Economics, Elsevier, vol. 206(C), pages 134-145.
    15. Jin, Ming & Li, Gang & Cheng, T.C.E., 2018. "Buy online and pick up in-store: Design of the service area," European Journal of Operational Research, Elsevier, vol. 268(2), pages 613-623.
    16. Bayram, Armagan & Cesaret, Bahriye, 2021. "Order fulfillment policies for ship-from-store implementation in omni-channel retailing," European Journal of Operational Research, Elsevier, vol. 294(3), pages 987-1002.
    17. Alexander Hübner & Andreas Holzapfel & Heinrich Kuhn, 2016. "Distribution systems in omni-channel retailing," Business Research, Springer;German Academic Association for Business Research, vol. 9(2), pages 255-296, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yang, Lu & Li, Xiangyong & Xia, Ye & Aneja, Y.P., 2023. "Returns operations in omnichannel retailing with buy-online-and-return-to-store," Omega, Elsevier, vol. 119(C).
    2. Yifeng Liu & Zhanhua Cao & Hongxu Wei & Peng Guo, 2024. "Optimizing Spatial Distribution of Retail Shops against Neighborhood Tree Canopy Shade Using Big Data Extracted from Streetscape," Land, MDPI, vol. 13(8), pages 1-18, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hübner, Alexander & Hense, Jonas & Dethlefs, Christian, 2022. "The revival of retail stores via omnichannel operations: A literature review and research framework," European Journal of Operational Research, Elsevier, vol. 302(3), pages 799-818.
    2. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    3. Jiu, Song, 2022. "Robust omnichannel retail operations with the implementation of ship-from-store," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    4. Li, Qi & Wang, Quansheng & Song, Peijian, 2022. "Do customers always adopt buy-online-and-pick-up-in-store service? Consideration of location-based store density in omni-channel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    5. Kong, Ruixiao & Luo, Li & Chen, Liuxin & Keblis, Matthew F., 2020. "The effects of BOPS implementation under different pricing strategies in omnichannel retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    6. Li, Zonghuo & Wang, Di & Yang, Wensheng & Jin, Hyun Seung, 2022. "Price, online coupon, and store service effort decisions under different omnichannel retailing models," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    7. He, Yi & Xu, Qingyun & Shao, Zhen, 2021. "“Ship-from-store” strategy in platform retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    8. Saha, Kushal & Bhattacharya, Subir, 2021. "‘Buy online and pick up in-store’: Implications for the store inventory," European Journal of Operational Research, Elsevier, vol. 294(3), pages 906-921.
    9. Gupta, Vishal Kumar & Ting, Q.U. & Tiwari, Manoj Kumar, 2019. "Multi-period price optimization problem for omnichannel retailers accounting for customer heterogeneity," International Journal of Production Economics, Elsevier, vol. 212(C), pages 155-167.
    10. Christiane Lehrer & Manuel Trenz, 2022. "Omnichannel Business," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 687-699, June.
    11. Jin, Delong & Caliskan-Demirag, Ozgun & Chen, Frank (Youhua) & Huang, Min, 2020. "Omnichannel retailers’ return policy strategies in the presence of competition," International Journal of Production Economics, Elsevier, vol. 225(C).
    12. Shi, Xiutian & Dong, Ciwei & Cheng, T.C.E., 2018. "Does the buy-online-and-pick-up-in-store strategy with pre-orders benefit a retailer with the consideration of returns?," International Journal of Production Economics, Elsevier, vol. 206(C), pages 134-145.
    13. Tagashira, Takumi, 2022. "Information effects of warehouse automation on sales in omnichannel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 66(C).
    14. Shujun Yang & Ivan Kai Wai Lai & Huajun Tang, 2022. "Pricing and Contract Coordination of BOPS Supply Chain Considering Product Return Risk," Sustainability, MDPI, vol. 14(9), pages 1-21, April.
    15. Jinrong Liu & Qi Xu, 2020. "Joint Decision on Pricing and Ordering for Omnichannel BOPS Retailers: Considering Online Returns," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    16. Dong, Shuang & Qin, Zhongfeng & Yan, Yingchen, 2022. "Effects of online-to-offline spillovers on pricing and quality strategies of competing firms," International Journal of Production Economics, Elsevier, vol. 244(C).
    17. Zhou, Yong-Wu & Zhang, Xiong & Zhong, Yuanguang & Cao, Bin & Cheng, T.C. Edwin, 2021. "Dynamic pricing and cross-channel fulfillment for omnichannel retailing industry: An approximation policy and implications," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    18. Li, Zonghuo & Guan, Xu & Mei, Wanxia, 2023. "Coupon promotion and its cross-channel effect in omnichannel retailing industry: A time-sensitive strategy," International Journal of Production Economics, Elsevier, vol. 258(C).
    19. Abadie, Amelie & Roux, Mélanie & Chowdhury, Soumyadeb & Dey, Prasanta, 2023. "Interlinking organisational resources, AI adoption and omnichannel integration quality in Ghana’s healthcare supply chain," Journal of Business Research, Elsevier, vol. 162(C).
    20. Chang, Ya Ping & Li, Jingwen, 2022. "Seamless experience in the context of omnichannel shopping： scale development and empirical validation," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:254:y:2022:i:c:s0925527322001918. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.