Logistics in omni-channel retailing: Modelling and analysis of three distribution configurations

Abstract

The growing importance of the online channel and the increased deployment of new technologies such as smart mobile devices and social networks create new opportunities and challenges for traditional retailers. The retailing industry is moving to a new phase, in which the distinctions between traditional and online channels disappear, namely omni-channel (OC) retailing. The new challenge is to understand how multiple channels can be synergistically managed to provide a seamless customer experience. In OC retailing, logistics represents a key success factor due to its impact on both customer service and total costs. Retailers need to define the distribution configuration for serving the online demand, making decisions on the integration level between online and traditional channels. Companies can set an ad hoc network for the online channel, or use the same network for both online and traditional channels at warehouse and/or transport levels. In this paper, we developed an assessment model of the operational costs for three distribution configurations in OC retailing. The model was also applied to a real Italian case operating in the consumer electronics industry. Results highlighted that the search for synergies between online and traditional flows in both warehouse and transport activities is important for the economic sustainability of OC systems.