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Demand Management Opportunities in E-fulfillment: What Internet Retailers Can Learn from Revenue Management

Author

Listed:
  • Agatz, N.A.H.
  • Campbell, A.M.
  • Fleischmann, M.
  • van Nunen, J.A.E.E.
  • Savelsbergh, M.W.P.

Abstract

In this paper, we explain how Internet retailers can learn from proven revenue management concepts and use them to reduce costs and enhance service. We focus on attended deliveries as these provide the greatest opportunities and challenges. The key driver is service differentiation. Revenue management has shown that companies can do much better than a one-size-fits-all first-come-first-serve strategy when selling scarce capacity to a heterogeneous market. Internet retailers have strong levers at their disposal for actively steering demand, notably the offered delivery time windows and their associated prices. Unlike traditional revenue management, these demand management decisions affect both revenues and costs. This calls for a closer coordination of marketing and operations than current common practice.

Suggested Citation

  • Agatz, N.A.H. & Campbell, A.M. & Fleischmann, M. & van Nunen, J.A.E.E. & Savelsbergh, M.W.P., 2008. "Demand Management Opportunities in E-fulfillment: What Internet Retailers Can Learn from Revenue Management," ERIM Report Series Research in Management ERS-2008-021-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:12244
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    References listed on IDEAS

    as
    1. E. Andrew Boyd & Ioana C. Bilegan, 2003. "Revenue Management and E-Commerce," Management Science, INFORMS, vol. 49(10), pages 1363-1386, October.
    2. Ann Melissa Campbell & Martin W. P. Savelsbergh, 2005. "Decision Support for Consumer Direct Grocery Initiatives," Transportation Science, INFORMS, vol. 39(3), pages 313-327, August.
    3. Ann Melissa Campbell & Martin Savelsbergh, 2006. "Incentive Schemes for Attended Home Delivery Services," Transportation Science, INFORMS, vol. 40(3), pages 327-341, August.
    4. Agatz, Niels A.H. & Fleischmann, Moritz & van Nunen, Jo A.E.E., 2008. "E-fulfillment and multi-channel distribution - A review," European Journal of Operational Research, Elsevier, vol. 187(2), pages 339-356, June.
    5. Niels Agatz & Ann Campbell & Moritz Fleischmann & Martin Savelsbergh, 2011. "Time Slot Management in Attended Home Delivery," Transportation Science, INFORMS, vol. 45(3), pages 435-449, August.
    6. Serguei Netessine & Sergei Savin & Wenqiang Xiao, 2006. "Revenue Management Through Dynamic Cross Selling in E-Commerce Retailing," Operations Research, INFORMS, vol. 54(5), pages 893-913, October.
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    Cited by:

    1. Xinan Yang & Arne K. Strauss & Christine S. M. Currie & Richard Eglese, 2016. "Choice-Based Demand Management and Vehicle Routing in E-Fulfillment," Transportation Science, INFORMS, vol. 50(2), pages 473-488, May.

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    More about this item

    Keywords

    E-fulfillment; demand management; home delivery; ketenbeheer; marketing-operations interface; revenue management;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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