Contextual adaptation of omni-channel grocery retailers’ online fulfilment centres

Abstract

Purpose The purpose of this paper is to investigate how grocery retailers configure their online fulfilment centres (OFC) as they move towards an omni-channel structure and what contextual factors influence their decisions. Design/methodology/approach An exploratory case study with three grocery retailers in the Nordic countries was conducted. The study investigates the current OFC configurations and identifies nine important contextual factors. Findings This study shows the importance of understanding the changes that omni-channel retailing entails for an OFC configuration. Nine contextual factors were identified. Several of the factors are found in previous theory, but this paper extends the knowledge of how they affect the configuration of an OFC in grocery retail. The changes in, for example, order characteristics create different requirements for picking, packing, sorting and shipping when compared with traditional distribution centres (DC). Although representing a separate flow for online fulfilment, OFC configuration depends on how the other logistics flows from the DC to stores are designed. Research limitations/implications To support further theory development, nine contextual factors and their relationship to OFC configurations are proposed. Practical implications This study provides managerial value in two ways. First, grocery retailers with one or more OFCs can benchmark existing solutions using the empirical case descriptions. Second, the findings provide grocery retailers with knowledge of how to configure an OFC. Originality/value The literature lacks a holistic approach towards how grocery retailers configure their OFCs and what factors affect these decisions. This study provides the first in-depth analysis of how the omni-channel context affects the configuration of all the aspects of an OFC.