Offline Showrooms in Omnichannel Retail: Demand and Operational Benefits

Advancing the marketing‐operations interface in omnichannel retail

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.

Inventory Showrooms and Customer Migration in Omni-Channel Retail: The Effect of Product Information

New opportunities and challenges forced by the ever-increasing importance of the online channel have arisen for 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. At the same time, the awareness of environmentally sustainable processes has been enhanced around the world and the environmental impact that results from the online order fulfilment process is becoming a key issue for logistics managers. The new challenge is to understand how multiple channels can be synergistically managed to provide a seamless customer experience, taking an economic and environmental perspective simultaneously. Retailers need to define the distribution configuration for serving the online demand, making decisions on the integration level between online and traditional channels. In this paper, we developed an assessment model of the operational costs and greenhouse gas emissions for three distribution configurations in OC retailing. The model was also applied to a real 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 a key factor for the economic and environmental sustainability of OC systems.

The Future of Omni-Channel Retail: Predictions in the Age of Amazon

Most retailers today sell products through an online channel in addition to traditional physical stores. We investigate how such a multichannel or omnichannel retailer should decide the number and size of physical stores. We show that a higher return rate for online purchases can incentivize the retailer to have fewer physical stores that are larger in size. As online shopping becomes more convenient, a retailer may prefer to have more physical stores that are smaller in size. We also study the effect of three popular omnichannel strategies that involve changes of the physical stores’ functions: (i) showrooms only display products for customers to inspect before they purchase online, removing fulfillment from physical stores; (ii) return flexibility expands the functionality of physical stores by allowing customers to return online orders at them; and (iii) fulfillment flexibility expands functionality by allowing customers to pick up products purchased online at physical stores. We show that when the physical stores are given fewer (more) functions, as with the showroom (return or fulfillment flexibility) strategy, the omnichannel retailer may find it optimal to increase (reduce) the number and/or size of the physical stores.This paper was accepted by Vishal Gaur, operations management.

Physical stores versus physical showrooms: Channel structures of online retailers

With the continuous upgrading of consumer demand and retail modes, more and more retailers are switching to an omnichannel retail mode. In order to study the location problem of offline physical stores of online retail enterprises that plan to implement the BOPS (Buy Online and Pickup in Store) omnichannel retail model, this paper considers consumers’ choice behavior under the omnichannel retail model; uses the MNL (Multinomial Logit) model to depict customers’ choice behavior between the online channel, BOPS channel, and offline physical channel; and constructs a location optimization model of offline physical stores with the goal of minimizing the enterprise’s cost. According to the characteristics of the model, an improved genetic algorithm was designed; the algorithm was improved on chromosome selection mode, crossover, and mutation rules. Finally, an example is calculated, and the physical store location scheme of a retail enterprise and the vehicle routing optimization scheme under the two-level distribution network are obtained, which verifies the effectiveness of the model and algorithm and provides a scientific reference for the physical store location decision of online retail enterprises planning to implement the BOPS omnichannel retail model. The impact of freight, return rate, and service level of physical stores on the location of offline physical stores is analyzed. The results show that in the process of expanding offline physical stores to implement the BOPS omnichannel retail model, online retail enterprises can reduce enterprise costs by improving the freight level and service level of the physical store. The higher the return rate of the online channel, the more necessary it is to expand offline physical stores, and the lower the enterprise cost. At the same time, management suggestions are put forward for the enterprise operation under the BOPS omnichannel retail mode.

Purpose This study aims to assess the coupon strategies of omnichannel retailers that face competition from e-retailers, which operate online channels, and traditional retailers, which operate physical stores and conduct coupon promotions through a self-built buy-online-pick-up-in-store (BOPS) channel. The current study investigated how distribution channel competition affects coupon strategies. Design/methodology/approach Three game-theoretic models are constructed based on whether the omnichannel retailer provides a coupon or not and whether the competitor is an e-retailer or traditional retailer. For each model, the consumer’s purchase behavior is characterized by utility function. Findings The results show that coupon promotions do not necessarily lead to increased profits. Profits will only increase if the shipping cost in the online channel is high and the hassle cost of BOPS purchases is low. Furthermore, the omnichannel retailer is more likely to provide coupons with larger value when competing with a traditional retailer than when competing with an e-retailer. Nonetheless, the omnichannel retailer benefits more from offering coupons when competing with traditional retailers than with e-retailers only if the hassle and shipping costs are low. Originality/value The study introduces coupon marketing as a co-opetition strategy for BOPS omnichannel. It demonstrates that omnichannel retailers can design distinct coupon strategies to induce consumer channel conversion and resist channel competition, which ultimately optimizes operational policy.

In the contemporary retail setting, online and physical channels coexist and communicate with one another, each using its distinct advantages to satisfy changing consumer demands. Developments in e-commerce technology support online shopping, which is defined by ease, variety, and personalization (Verhoef et al., 2015). On the other hand, offline shopping is still popular because it emphasizes human attention, instant access to merchandise, and experiential interaction (Grewal et al., 2017). In order to provide seamless customer experiences across several touchpoints, omnichannel retailing- which combines these two formats- has become a competitive strategy (Rigby, 2011). Nonetheless, issues including data privacy, logistical complexity, and inventory synchronization continue to exist (Hübner et al., 2016). In order to improve consumer satisfaction and operational efficiency, this study looks at how merchants might maximize channel integration. The results highlight how crucial it is to make investments in supply chain innovation, data analytics, and customer trust in order to thrive in a hybrid retail model. This essay adds to the conversation about customer-focused and sustainable retailing methods. Keywords: Consumer behaviour, E-commerce Technologies, Digital Transformation, Retail Strategies, Inventory Synchronization, Data Privacy, Hybrid Retail Models.

Operation strategies for an omni-channel supply chain: Who is better off taking on the online channel and offline service?

Robust pricing and inventory strategies for an omnichannel retailer under carbon tax and cap-and-offset regulations

The world of retailing has changed dramatically in the past decade. Sales originating at online channels have been increasing an average 15% every year since 2010, and are expected to reach 25% of US retail sales by 2024. A much larger fraction of sales is affected by online channels in different touch points during the customer path to purchase. Omnichannel customers increasingly expect to be able to use a combination of channels in their interactions with retailers, and retailers are trying to provide customers with a seamless shopping experience across multiple touch points. This book presents state-of-the-art research in omnichannel retail from various contributing authors who are recognized field experts in this area. Readers will find a deep discussion of these issues through the lenses of operations management, emphasizing the changes in the marketing and operations interface associated with serving an omnichannel demand. This chapter serves as an introduction to the book and presents the structure of its three parts: “Omnichannel Business Models”, “Data-Driven Decisions in an Omnichannel World”, and “Case Studies in Omnichannel Retailing”.

The Effect of Multi-Channel and Omni-Channel Retailing on Physical Stores

As increasingly retail enterprises have adopted the omnichannel retailing strategy, both online-generated and offline-generated reviews should be considered to better understand the helpfulness of online reviews in the omnichannel retailing context. Drawing on the Elaboration Likelihood Model, the present study attempts to examine the impacts of review label volume, review content length, and review label-content relevance on review helpfulness in the omnichannel retailing context. The empirical data of 2,822 product reviews were collected from Suning.com. The results of Negative Binomial Regression showed that both central cue (review label-content relevance) and peripheral cue (review content length) positively affect review helpfulness. Specifically, the positive effect of review content length on review helpfulness will be stronger when the online review is submitted from an omnichannel retailer’s online store. On the contrary, the positive effect of review label-content relevance on review helpfulness will be weaker when the online review is generated from an omnichannel retailer’s online channel.