Omnichannel Retailing Research Articles

Why does omni-channel allow retailers to foster supply chain resilience? Evidence from sequential mixed methods research

ABSTRACT The omni-channel (OC) approach improves efficiency under normal conditions and fosters resilience when a crisis hits, e.g. COVID-19. We adopt the sequential mixed methods research to conduct a two-stage investigation to explore how OC retailers achieve supply chain resilience (SCR). In stage 1, three key capabilities of OC retailers to foster SCR are identified qualitatively, i.e. collaboration, flexibility, and redundancy, as well as the conceptual model is developed based on the dynamic capabilities view. In stage 2, the roles of key capabilities in fostering SCR in three phases, i.e. preparedness, responsiveness, and recovery, is quantitatively examined, by using partial least squares structural equation modelling to test the hypotheses based on a sample of 225 Chinese OC retailers. The findings indicate that flexibility and redundancy are more significant for responsiveness, whilst collaboration is more crucial for recovery, offering valuable insights for supporting retailers in OC transformation and in setting a capabilities portfolio to withstand supply chain disruptions.

Key metrics to measure the performance and impact of reusable packaging in circular supply chains

Circular supply chains comprise the industrial production and supply chain systems used by companies to eliminate waste and recover value in products and materials. There are a variety of circular strategies including recycling in waste management, returns and repair in consumer-facing industries, and reusable packaging in supply chains. Successful implementation and management of these circular strategies requires the ability to measure and report on progress across different functions and processes. In this paper, we propose a new set of metrics to measure the performance of reusing items in a circular supply chain. We review the literature on metrics in circular supply chain management and reusable packaging in supply chains. We then classify the proposed metrics based on whether they measure the circularity of a circular supply chain initiative or impact of implementing the initiative. They also are segmented based on the level of detail they incorporate from the product level to the system level. We then demonstrate the use of the proposed metrics through a case study with an omnichannel retail company. We find that product-level metrics facilitate the comparison of different types of reusable and single-use packages with the potential to reduce lifecycle greenhouse gas emissions. We also find that measuring system-level Total Logistics Costs helps identify potential challenges with the feasibility of a reusable packaging system including the implications of not recovering packages and amortizing initial costs across multiple use cycles. Our aim in this paper is to address the gap in circularity and impact metrics focused on reuse strategies in supply chains. This new set of metrics provides companies with a tool to measure and report on progress toward a circular economy. It also suggests future avenues for research to assess the economic, environmental, and social dimensions of sustainability.

Order Fulfillment Under Pick Failure in Omnichannel Ship-From-Store Programs

Problem definition: We consider the setting where a retailer with many physical stores and an online presence seeks to fulfill online orders using an omnichannel fulfillment program, such as buy-online ship-from-store. These fulfillment strategies try to minimize cost while fulfilling orders within acceptable service times. We focus on single-item orders. Typically, all online orders for the item are sent to a favorable set of locations to be filled. Failed trials are sent back for further stages of trial fulfillment until the process times out. The multistage order fulfillment problem is thus an interplay of the pick-failure probabilities at the stores where they may be shipped from and the picking, shipping, and cancellation costs from these locations. Methodology: We model the problem as one of sequencing the stores from which an order is attempted to be picked and shipped in the most cost-effective way over multiple stages. We solve the fulfillment problem optimally by taking into account the changing pick-failure probabilities as a result of other online order fulfillment trials by casting it as a network flow problem with convex costs. We incorporate this as the second stage of a two-stage online order acceptance problem and generalize earlier results to the case with pick failures at stores. Results: We investigate the real-world performance of our methods and models on real order data of several of the top U.S. retailers that use our collaborating e-commerce solutions provider to optimize their fulfillment strategies. Academic/Practical Relevance: Our work enables retailers to incorporate pick failure in their order management systems for ship-from-store programs. Our new online order-acceptance policies that take into account pick failures can thus create significant savings for omnichannel retailers. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.1164 .

Last-Mile Delivery Methods in E-Commerce: Does Perceived Sustainability Matter for Consumer Acceptance and Usage?

Sustainability has gained significant importance in e-commerce, as it impacts both consumer behavior and company success. This paper contributes to the literature on sustainability in e-commerce by studying the perceived sustainability of three common last-mile delivery methods (home delivery, parcel lockers, and click and collect) and other drivers of consumers’ acceptance of each delivery method (perceived costs, convenience). Based on a review of the relevant literature, a conceptual model integrating key determinants of consumers’ attitudes to delivery methods and their intention to use them is derived and tested using a sample of 536 German online buyers. The results demonstrate that perceived ease of use and perceived usefulness increase the acceptance of the delivery methods, whereas perceived costs constrain it. The findings reveal significant influences of perceived sustainability on the acceptance of the delivery methods, which vary between its three components (environmental, economic, and social) and regarding the delivery method. Retailers and collaborating parcel delivery services are advised to continue making last-mile delivery methods more convenient. However, they are also advised to implement standards in terms of environmental and social sustainability and inform customers about their efforts regarding sustainable last-mile delivery to build a competitive advantage in omni-channel retailing.

Location Optimization of Offline Physical Stores Based on MNL Model under BOPS Omnichannel

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.

Facility Selection Model for BOPS Service for an Omnichannel Retail Chain

Retail sector around the world is going through a transition due to digitalization. Customers now demand convenience of online channel with instant fulfillment of offline channel. As a result, the concept of omnichannel retailing has come into existence. In omnichannel retailing, both the channels of a firm are fully or partially integrated. There are many strategies that may be developed by retailers for efficient functioning of the omnichannel retail chain. The choice of such a strategy depends upon the comparative benefits that can be derived from them. One such strategy gaining immense attention of retailers is the Buy Online Pickup in Store (BOPS) strategy. In order to understand this BOPS, we conducted a detail case study of an Indian multichannel retail chain who is considering the option of launching BOPS option in few of its retail stores. The focus is to evaluate and select a fixed number of operational retail stores to also act as pick-up points for online deliveries. <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">K</i> -means clustering is utilized for the formation of retail zones as per the number of retail stores to be selected. The retail stores in each zone are evaluated on the basis of a number of criteria such as demand, inventory carrying capacity, cost, and population characteristics using analytical hierarchy process and complex proportional assessment-grey. Based on these evaluations, the best suitable retail store is selected for expansion from each zone. The result implications drawn in the study can provide an understanding of the future strategies that can be developed by the decision makers of the firm for launching the BOPS option. This article can also be beneficial to other Indian retail firms who can derive meaningful insights from the findings.

The Impact Of Omnichannel Retail On Customer Patronage Intentions: The Role Of Consumer Empowerment, Service Failure, And Customer Satisfaction

The effects of omnichannel integration on customers are examined in this study along with the mediating roles that customer empowerment, customer satisfaction, and service failure perform. Omni-channel retail enables order processing convergence through continuous information exchange, general operations, logistics, and operations with inventory across all channels. To gather information, 160 young Indonesian consumers who have utilized omnichannel-based applications will be questioned. &nbsp;In order to verify validity, reliability, and hypothesis testing, the data was processed using SMART PLS. The findings show that omnichannel integration increases consumer empowerment and satisfaction, which has a beneficial impact on purchasing intentions. &nbsp;The customer's intents are positively impacted by the service's failure as well. This study deepens our understanding of how multichannel shopping boosts purchase and patronage intentions by maintaining services across online and physical channels. In addition to the conclusion that customers prefer omnichannel, research on retail literature, customer experience, and e-commerce is demonstrating the ways in which internal consumer states influence consumers' buy intentions.

Omnichannel retail operations with mixed fulfillment strategies

Many retailers are implementing omnichannel (OC) strategies including buy online, pick up in store (BOPS), buy online, ship from store (BOSS) and buy online, ship to store (STS). We study the impact of mixed fulfillment OC strategies (e.g., BOPS-STS, BOSS-BOPS-STS) on the retailer’s store operations. We build a stylized model where the retailer operates both a physical store and online channels, and faces two segments of customers: fixed-channel customers and OC-type customers. We find that both BOPS-STS and BOSS-BOPS-STS may induce customers to shift fulfillment options for time-insensitive or experience products when pickup hassle cost is low. In addition, both BOPS-STS and BOSS-BOPS-STS can expand the market for time-sensitive or experience products. We show that BOSS-BOPS-STS may increase the retailer’s optimal inventory level for time-sensitive or experience products when in-store hassle cost is high, and will decrease the optimal inventory level for time-insensitive or non-experience products when both pickup and in-store hassle costs are low. These two mixed strategies may increase or reduce the retailer’s profits, depending on whether they drive effects of option shift and market expansion and whether their fixed costs exceed certain thresholds. Finally, we find that different OC strategies interact and their effects on the retailer’s store operations and customers’ channel choices vary across product types.

Uncertain random bilevel programming models and their application to shared capacity routing problem

Bilevel programming is frequently used to resolve decentralized decision-making problems in a hierarchical system. In practice, these problems usually contain indeterminacy parameters because of volatile factors or emergencies. As two sorts of indeterminacies, randomness and uncertainty may appear in a same system simultaneously, which produces uncertain random phenomena. For resolving decentralized decision-making problems containing uncertain random factors, this study serves to construct the uncertain random expected value, chance-constrained and dependent-chance bilevel programming models. And these models are all transformed into their corresponding equivalent forms via rigorous derivation. Furthermore, a metaheuristic algorithm is employed to obtain the Stackelberg-Nash equilibrium solutions of proposed models. Finally, the established models are applied to a shared capacity routing problem in the context of omni-channel retailing.

Engaging with omnichannel brands: the role of consumer empowerment

PurposeThis study aims to integrate brand and retailer levels variables to examine the direct and indirect relationships between omnichannel retailing and consumer engagement.Design/methodology/approachSurvey data are collected from a sample consumers of different omnichannel retailing brands operating in the skin care industry. Partial least squares structural equation modeling is utilized.FindingsThe study finds brand channels' integrated interactions (process and content consistency) to increase consumer brand engagement. Findings show retailer consumer empowerment to intensify the impact of omnichannel retailing on consumer engagement. Results also show brand channels' integrated interactions to increase consumer brand familiarity, which mediates the effect of omnichannel retailing on consumer engagement.Originality/valueThis study suggests that integrating brand- and retailer-level variables is vital to understand the effect of omnichannel retailing on consumer engagement. The study concludes that for successful omnichannel strategy, collaboration between brands and retailers is imperative.

Mathematical modeling of Vehicle Routing Problem in Omni-Channel retailing

The biggest challenge that retailers face in satisfying consumer requirements is to ensure an integrated/seamless shopping experience consistent with the purchase, regardless of how the purchase is made. Giant companies have many depots, points of delivery, retail stores, etc. in different cities. This study focused on modeling vehicle routing in a retail distribution network. Goods may be sold in the distribution system addressed in the research model employing two methods: physical and online sales. This study examined the routing problem in the Omni-Channel (OC) retail system, focusing on a multi-objective approach to increase consumer physical convenience (ease of access) using several delivery techniques from six points of delivery. To this end, the optimization of a distribution network was examined through two objective functions. The first objective function minimized the cost of the distribution network, whereas the second maximized customer convenience in terms of the minimum shipment delivery time from the four positions (retail store, intermediate depot, points of delivery, and city distribution center by considering the demand for each product). Two meta-heuristic algorithms, MOGWO and NSGA-II, were used to solve the problem. The results demonstrate that the two-step approach generates smaller objective function values than the second objective function. In addition, the total costs of the two-stage approach were higher than those predicted by the proposed model. Consequently, it was concluded that, in the proposed mathematical model, owing to the integrated optimization of a distribution system and considering the possibility of direct shipment of products to customers, Pareto points are obtained with a lower cost and higher customer satisfaction.

Dynamic pricing in the presence of strategic consumers with ‘experience-in-store-and-buy-online’

Experience-in-store-and-buy-online (ESBO) is a popular omni-channel strategy. This paper studies the effects of inspection service provision on the interactions of a dynamic-pricing retailer and strategic consumers, i.e., the effects of the ESBO initiative on store operations. Selling a seasonal product over two periods, the omni-channel retailer may allow consumers to inspect this product offline only in the first period (first-period inspection) or in both periods (two-period inspection). First, we find that allowing first-period inspection makes the retailer better off. The retailer will price the product higher in the first period but probably lower in the second period. Even so, more consumers will purchase in the first period: that is, allowing first-period inspection can somewhat deter strategic deferral. Meanwhile, the seemingly negative intertemporal showrooming behavior (i.e., inspect the product offline in the first period but defer online purchase to the second period) benefits the retailer. Compared to first-period inspection, allowing two-period inspection increases the retailer’s prices in both periods as well as profit, provided that inspection is definitely available in the second period. On the other hand, when inspection is possible in the second period, it may be profitable to allow inspection only in the first period..

Cross-Channel Behavior in Indonesia: Are Omnichannel Shoppers More Loyal than Multichannel Shoppers?

The retail industry in Indonesia is still in the transition phase from multichannel to omnichannel. Hence, the behavior of shoppers is divided into two broad categories, namely multichannel and omnichannel shoppers. The research aimed to know the socio-demographic characteristics of multichannel and omnichannel shoppers in Indonesia. It also tested the difference between both in showing cross-channel behavior and loyalty to the retailers. The data were obtained by questionnaires from 341 respondents with purposive sampling. The descriptive method with cross-tabulation analysis was applied to capture the socio-demographic characteristics of multichannel and omnichannel shoppers. Meanwhile, the comparative method with an independent sample t-test tested the difference between both types of shoppers in showing cross-channel behavior and loyalty to the retailers. The results show that millennial and female shoppers are the most potential segment at this time to be targeted in the context of omnichannel retailing. Both multichannel and omnichannel shoppers are dominated by those whose income is less than Rp4,5 million to Rp10 million with 3 to 5 persons in their household. Moreover, there are significant differences between multichannel and omnichannel shoppers in the context of cross-channel behavior and loyalty. Omnichannel shoppers show cross-channel behavior and loyalty more than multichannel shoppers.

Exploring the Sustainable Usage Intention of BOPS: A Perspective of Channel Integration Quality

BOPS (Buy Online, Pick up in Store) is a popular channel strategy that plays an important role in promoting the sustainable development of omni-channel retailing. Focusing on consumer’s sustainable usage intention of BOPS service, this paper uses a Technology Acceptance Mode (TAM) framework to investigate how the channel integration quality influences the willingness to adopt BOPS service from four dimensions: channel service transparency, channel choice breadth, content consistency, and process consistency. Our findings support previous research in the TAM field, as perceived usefulness and perceived ease of use strongly affect consumer’s favorable attitude towards BOPS service. The pivotal roles of channel service transparency and process consistency in the formation of BOPS using intention is verified, as they both have positive effect on perceived usefulness and perceived ease of use. However, channel choice breadth indirectly affects the sustainable usage intention of BOPS through perceived usefulness but has no significant effect on perceived usefulness. In addition, content consistency positively affects perceived ease of use, but the diversity of channels does not necessarily make consumers find BOPS more useful. On this basis, the implications of BOPS service management are discussed.

Omnichannel Retail Strategy Considering Cost-Sharing and Consumer Heterogeneity under Different Power Structures

This paper explores two Omnichannel retail models consisted of one online platform and one brick-and-mortar store under different power structures considering cost-sharing mechanisms. In retail supply chain dominated by the online platform and brick-and-mortar store, respectively, under a “Buy online and pick up in store” strategy, the influences of the cost-sharing ratio and the proportion of traditional consumers on pricing and service decisions, the demands of various groups of consumers, and the performance of the retail system have been examined. In addition, the results of decision-making and profitabilities of retailers under different power structures have also been considered. The key findings show that the optimal price and service level first increase and then decrease with the cost-sharing ratio in a retail system dominated by the online platform. In contrast, the price and service level increase with the cost-sharing ratio only when the proportion of traditional consumers is relatively large in a retail system dominated by brick-and-mortar store. The symmetry demand increases as the scale of traditional consumers shrinks when the cost-sharing ratio is relatively large in a retail system dominated by the online system. At the same time, it only increases when the cost-sharing ratio is in the range of 5/8,5/6 in a retail system dominated by the brick-and-mortar store. No matter what the power structure is, the profit of the retail system always first increases and then decreases with the proportion of traditional consumers. Additionally, when the cost-sharing ratio and the proportion of traditional consumers are relatively small, the total demand in the retail system dominated by the online platform is higher than that in the retail system dominated by the brick-and-mortar store. The total profit is larger in the online platform-dominated retail system than that in the brick-and-mortar store-dominated retail system when the cost-sharing ratio is relatively high. However, when the cost-sharing ratio is relatively low, the profitability of the brick-and-mortar store-dominated retail system is stronger.

Determinants of Omnichannel Shopping Intention for Sporting Goods

Omnichannel retailing is a revolutionary business strategy of recent years which allows customers to engage with retailers using multiple channels and touchpoints to make their shopping experiences better. The main purpose of the current research is to identify the determinants of omnichannel shopping intention for sporting goods. This research applied the UTAUT2 model to study the determinants of omnichannel shopping intention of 406 Indian respondents and tested the relationship using the structural equation model. Responses were collected from December 2021 to January 2022. The empirical result of the research shows the influence of performance expectancy, social influence, effort expectancy, hedonic motivation, habit, and perceived value on omnichannel shopping intention for sporting goods. Among the seven constructs, performance expectancy emerged as the major contributor, followed by hedonic motivation, habit, perceived value, effort expectancy, and social influence of the omnichannel shopping intention. This paper also presented the analysis of the moderating effect of gender and found that performance expectancy, habit, perceived compatibility, and hedonic motivation have significantly different effects on omnichannel shopping intention. These findings provide several important implications for both researchers and sporting goods retailers in developing marketing strategies.

The Effect of Omnichannel Integration on Fresh Food Customer Engagement from the Viewpoint of Flow Experience

Customer engagement is a new value index affecting the omnichannel benefits of enterprises. It is beginning to attract the attention of both scholars and managers. However, there is still a lack of research on the mechanism influencing customer engagement in the fresh food omnichannel retail context. Drawing from the stimulus–organism–response (SOR) framework, this paper builds a relationship model between omnichannel integration and fresh food customer engagement. In addition, the paper empirically analyzes the mechanism of omnichannel integration’s impact on fresh food customer engagement. The findings show that omnichannel integration promotes flow experiences through three modes: information integration, business integration, and service and distribution integration. Flow experience is mediating the relationship between omnichannel integration and customer engagement. Strengthening the customer engagement knowledge system can help fresh food omnichannel retailers to create and manage the long-term cooperative relationship between customers and the company’s value creation. The higher the degree of omnichannel integration of fresh food retail firms, the more conducive it is to enhancing the customer flow experience, which will positively impact customers’ attitudinal and behavioral engagement.

Optimizing the inventory and fulfillment of an omnichannel retailer: a stochastic approach with scenario clustering

We study an inventory optimization problem for a retailer that faces stochastic online and in-store demand in a selling season of fixed length. The retailer has to decide the initial inventory levels and an order fulfillment policy such that the expected total costs are minimized. We approximate the problem by a two-stage stochastic optimization on a reduced number of scenarios. For deciding the representative scenarios, we propose a new similarity measure and a novel technique that combines the framework of Good–Turing sampling and Linear Programming. On randomly generated instances, the proposed algorithm obtains an average cost reduction of 7.56% compared to a state-of-the-art algorithm in the literature. The proposed algorithm works considerably better for short time horizons and a relatively large proportion of in-store customers.

Fulfillment and pricing optimization for omni-channel retailers considering shipment of in-store demand

Omni-channel retailers meet the demand through the e-commerce channel and the stores in different locations. They have specific centers to fulfill their online orders (e-fulfillment centers); however, they may fulfill their online orders using their in-store inventory. On the other hand, retailers can use pricing decisions to control the demand in each channel. We first model the customers’ demand by the multinomial logit (MNL) choice model. We then propose two mixed-integer nonlinear programming (MINLP) models to maximize the total profit by considering both fulfillment and pricing decisions. We assume e-fulfillment inventory can also be used as a backup inventory for in-store orders if stores are out of inventory, but only for a store in the same zone. We also assume limited initial inventory and no replenishment in a finite selling horizon. In the second MINLP model, we also allow for multiple shipping options and inventory decisions. By numerical experiments, we show that omni-channel retailers can increase their profit by having control over initial inventory allocation and fulfilling the in-store demand by e-fulfillment inventory.

STRATEGI OMNICHANNEL SEBAGAI UPAYA PENINGKATAN TRUST DAN BRAND IMAGE PADA MASA PANDEMI COVID-19 KOTA SURABAYA

ABSTRACTThis study analyzes omnichannel strategies as an increase in trust and brand image using qualitative methods with indepth interview data analysis. The focus of this research is omnichannel, trust, and brand image which seeks to be analyzed so that it can explain social phenomena that occur in society. The location of this study was conducted in the city of Surabaya, the location of the study was determined because the complex problems discussed in this study were experienced by consumers and producers in the city of Surabaya. Although it is not fully researched by each region, considering the urgency of this research is in the online marketplace where all consumers and producers in the city of Surabaya can be actively involved in market mechanisms. The study broadens the understanding of the field of omnichannel retail in a number of dimensions, firstly the research assumes a linear consumer decision-making process. Second, the literature and structure review brings the spotlight needed to observe omnichannel based on a broader management perspective. This focus is more context-specific and fragmented from the findings about the decision-making process. Fourth, this study shows results in online business people who do not understand much about omnichannel strategies carried out by the segmentation of medium to upper business people.