Configuring Retail Fulfillment Processes for Omni-Channel Customer Steering

ABSTRACT

The fulfillment of customer orders has gained a particularly important role within omni-channel retailing, as it requires significant effort to integrate logistics networks and product flows. Offering additional fulfillment options is costly but allows the enhancement of customer services via cross-channel substitutions and faster deliveries. Retailers are asking themselves how they can leverage these integrated systems to improve return on investment as well as customer service. One option is to influence customers’ channel choice (i.e., steering). Because this has so far mainly been viewed from a marketing perspective, this study investigates how and why different fulfillment options can help to steer customers across channels. By using multiple sources of data (i.e., market data, retailer interviews, customer focus groups), this paper identifies how customers can be guided through channels by means of related options in inventory management (e.g., cross-channel inventory information and substitution), delivery modes (e.g., differentiation of prices and delivery velocity across channels), and return modes (e.g., pricing for returns and options to return goods in-store). In essence, this research paper contributes a theory of cross-channel customer steering by means of different fulfillment options.

KEY WORDS AND PHRASES:

• Omni-channel retailing
• supply chain management
• order fulfillment
• fashion retailing
• cross-channel retailing
• online retail

Acknowledgments

We are deeply grateful to GS1 Germany and its Academic Council ECR for the financial funding of the empirical study, as well as the discussions on a previous version of this manuscript. We also thank the participating experts for their time, effort, and valuable feedback on an intermediate report, as well as our focus group participants for their insights from a customer perspective. In addition, we thank the anonymous reviewers for their valuable recommendations, which have significantly improved our paper.

Additional information

Notes on contributors

Johannes Wollenburg

JOHANNES WOLLENBURG ([email protected]) holds a Ph.D. in Business Administration with a focus on supply chain management from the Catholic University of Eichstaett-Ingolstadt, Germany. His primary research interest lies in omni-channel retail management. He works for an international logistics service provider, connecting the online and offline retail worlds. Previously, he was a strategy consultant in the consumer goods and retail industry. His research was funded by the Erich-Kellerhals Foundation. Dr. Wollenburg’s latest research has been published in the International Journal of Physical Distribution & Logistics Management and the International Journal of Retail and Distribution Management.

Andreas Holzapfel

ANDREAS HOLZAPFEL ([email protected]) is a Full Professor for Logistics Management at Hochschule Geisenheim University, Germany. He received his Ph.D. in Business Administration from the Catholic University of Eichstaett-Ingolstadt, Germany. His research interests focus on retail logistics, operations and supply chain management, especially logistics planning systems in omni-channel retailing. Dr. Holzapfel is author and coauthor of several articles published in European Journal of Operational Research, International Journal of Physical Distribution and Logistics Management, Business Research, and Operations Management Research.

Alexander Hübner

ALEXANDER HÜBNER ([email protected]; corresponding author) is a professor for Logistics and Supply Chain Management at Technical University of Munich, Germany. He is an affiliate Professor of the Supply Chain and Logistics Excellence network (SCALE) of the Massachusetts Institute of Technology and was Professor at the European Business School, Wiesbaden Germany and the Catholic University of Eichstätt-Ingolstadt. His research interests focus on decision support systems in retail industry. His latest work has been published in European Journal of Operational Research, Transportation Science, International Journal of Physical Distribution and Logistics Management, and International Journal of Retailing and Distribution Management.

Heinrich Kuhn

HEINRICH KUHN ([email protected]) is a Full Professor for Production and Operations Management at the Catholic University of Eichstaett-Ingolstadt, Germany, and a Guest Professor at the Free University of Bolzano, Italy, and the University of Vienna. He received his Ph.D. in Industrial Engineering from Darmstadt University of Technology, Germany, and completed his formal qualifications as a professor in Business Administration at the University of Cologne, Germany. His research interests focus on automotive and consumer goods and retail. Dr. Kuhn is author or coauthor of numerous articles published in Naval Research Logistics, IIE Transactions, International Journal of Production Research, European Journal of Operational Research, and other journals. He is an Associate Editor of Business and Research as well as Omega, the International Journal of Management Science.