Channel-level resource allocation decision in multichannel retailing: A U.S. multichannel company application

Abstract

The purpose of this paper is to explore the managerial implications of a customer-driven resource allocation methodology in multichannel retailing. A new resource allocation metric is proposed to measure the value of each channel structure in a company with multiple channels. In addition, we have validated the model by implementing it in a multichannel company. The prescriptive model proposed in this research, therefore, contributes to filling the literature gap in four main areas: (1) It incorporates market segment, customer wants, channel operating costs, and interrelationships among channels for effective resource allocation decisions. (2) The model is flexible to include omnichannel options as an alternative (e.g., buy-online-pickup-in-store). (3) It includes operating costs and customer perspectives together to evaluate the channel structures. (4) This study uses a real-world case study approach to implement the proposed model in a U.S. multichannel company producing scientific, biotechnology cameras. The feedback from the managers who participated in the budget allocation process confirmed the utility of this approach.