Distribution Systems in Omni-Channel Retailing
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Course: | BUS602: Marketing Management |
Book: | Distribution Systems in Omni-Channel Retailing |
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Date: | Friday, May 17, 2024, 12:23 AM |
Description
This scholarly article addresses the question that several marketers now face in our new e-commerce, internet-based marketing. Omni channel marketing has become common among marketers in recent years because more consumers can be reached by offering different channels of distribution. Omni channel marketing, however, presents challenges to the firm, as the article describes.
Abstract
The growing importance of online sales means that traditional bricks-and-mortar retailers need to create new distribution systems to serve customers through multiple channels. Building an effective and efficient omni-channel (OC) distribution system, however, leads to multiple challenges. The questions arise for example, from where online orders should be fulfilled, how delivery and return processes can be organized, and which context-specific OC distribution systems exist. Answering these questions retail research and practice require an overall view of the distribution concepts for direct-to-customer and store deliveries in OC retailing, including the associated return processes. This overall picture is still missing in the literature. We conducted an exploratory study to close this observable gap in the literature. This exploratory study is based on semi-structured interviews with major OC retailers in German-speaking countries and was complemented by market data research and discussions with further experts in the field of OC retailing. Based on the results of the study, the forward distribution system in OC retailing is characterized by the sources (supplier DCs, retailer DCs, stores) and destinations (home, store) which describe the options for store delivery, home delivery, and store pickup. Return processes are likewise characterized by the sources (store, home) and destinations (store, DC, return center). This framework forms the foundation for analyzing contextual criteria, identifying when the different conceptual designs are applied, determining industry-specific characteristics, and illustrating ways to further advance OC retailing. The present paper, therefore, contributes to the literature in three main areas: (1) it identifies and systematizes the forward and backward concepts in OC retailing, (2) it reveals application and development areas for achieving excellence in OC fulfillment and logistics, and (3) shows the need for developing sector- and context-specific OC distribution systems.
Keywords: Omni-channel retailing; Retail supply chain management; Logistics archetypes; Exploratory study
Source: Alexander Hubner, Andreas Holzapfel, and Heinrich Kuhn, https://www.econstor.eu/bitstream/10419/177380/1/10.1007_s40685-016-0034-7.pdf
This work is licensed under a Creative Commons Attribution 4.0 License.
Introduction
The share of online sales in retail is growing
globally. It is driven by an
increase in sales in existing online channels, as well as by the ongoing
market entry of bricks-and-mortar retailers into e-commerce. As
retailing develops towards a seamless omni-channel (OC) shopping
experience, the distinctions between physical bricks-and-mortar stores
and webshops will vanish. This OC revolution
was triggered by the recent reaction of bricks-and-mortar retailers to
the new service offers from pure online retailers. The majority of bricks-and-mortar retailers, therefore, now serve
customers via multiple sales channels. Additionally, distance
retailers, such as pure online players, are establishing physical stores
to expand their service offerings.
The
growing number of channels also increases complexity from a logistics
point of view. The fulfillment process is no
longer linear, because bricks-and-mortar retailing is increasingly
overlapping with distance retail. Before, supply
chain management was responsible for delivering goods to a retail store.
The store was the end point of the transaction. Online retailing has now placed distribution systems on the front
line, since retailers need to offer a variety of options for finding,
buying, and returning goods across bricks-and-mortar stores and webshop. Bricks-and-mortar stores today
are only one of a set of channels. With this new set of channels,
retailers must simultaneously accommodate and anticipate demand and
ensure availability, meet varying lead-times, and keep costs down for
each channel.
Essen and Leeuw show
in their global report of 1000 webshops that product flows and
logistics systems are not yet fully linked across channels. For example,
less than 40 % of webshops that belong to a retailer with
bricks-and-mortar stores offer the possibility of returning orders to
the store. Similarly, store pickup of online orders is not provided by
about 70 % of the retailers with multiple channels. These relatively low
shares of cross-channel connections may not be surprising, as even the
simplest form of cross-channel fulfillment leads to multiple challenges.
For example, if a retailer offers buy online and pick-up in-store, it
needs answers to questions such as where inventory will come from and
will the products be picked in-store, in an e-commerce distribution
center (DC) or in a bricks-and-mortar DC. Retailers rapidly find
themselves descending into the midst of a strategic review of their
entire supply chain network. Moreover,
customers demand perfect order fulfillment and are unwilling to listen
to excuses. This requires "real-time, channel
agnostic visibility" across the distribution systems. It is
not surprising, therefore, that four of five retailers believe their
supply chain does not fit the purpose of OC retailing, and requires
re-engineering of its physical product flows.
This
requires OC retailers to set up connected physical flows of goods and
operational structures across channels without sacrificing their
business model due to growing complexity. Thereby retailers are
increasingly facing the challenge of re-engineering their processes to
enable seamless logistics across all channels. The Vice President SCM of
an electronic retailer formulates this in the following way:
"Some rules of the game we had to learn in bricks-and-mortar business
do no longer apply with the advent of e-business. We can no longer think
in the bricks-and-mortar business model".
To complicate matters,
return logistics capabilities must be built up to manage the relevant
volume of returns, because most online customers demand an easy and
convenient way for returning their products. All
this requires distribution systems for forward and backward processes
that serve customers in stores and simultaneously offer personal
deliveries, e.g., store pickup and home deliveries, as well as in-store
return of online orders. Integration across channels is changing and the
challenge is to implement it in the most effective and efficient way,
rather than deciding whether or not to do it.
Due to these recent and ongoing
transformational challenges, retail research and practice lack a
structured view of the design options for OC distribution systems,
because delivery and return options, and customer preferences are
evolving over time. In particular, the field requires the generic
systematization of goods distribution within multiple retail channels.
This
includes an analysis of operational challenges, service impacts,
contextual factors, and application areas for OC forward distribution
and return concepts developed in retail practice. Practitioners are
seeking guidance on how to merge these structures. Kozlenkova et al. conclude from a literature review that multiple channel research
is needed to optimize the system of different distribution
configurations.
This paper, therefore, lays the groundwork for OC
distribution systems and extends the literature, because it is the
first study to provide a comprehensive perspective on OC distribution
based on empirical data. The term "comprehensive" in our context refers
to an overall perspective of the major OC retail sectors and all the
subsystems in forward and backward distribution. We discuss the
advancements in and the advantages and requirements of these concepts.
Theoretical insight is gained from demonstrating how the addition of a
new distribution channel can alter our understanding of retail logistics
management.
To streamline distribution issues, we focus on
non-food distribution, which differs fundamentally from food
distribution in terms of its requirements. Nowadays non-food is
still the main sector for OC concepts. Non-food
distribution is characterized by made-to-stock and non-perishable items
that can be shipped regardless of freshness and temperature constraints.
Non-food home delivery in Europe is usually fulfilled by carrier,
express, and parcel providers (CEP), and without customers having to be
at home. As online retailing also displays
country-specific patterns and shopping behavior and because of the
different international delivery models, we concentrate on the largest
European retail market, i.e., the German-speaking countries. This also
allows a comparison of (national) logistics systems between retailers.
The
remainder of this paper is organized as follows: Sect. 2 elaborates the
setting for OC distribution. Afterwards Sect. 3 presents an overview of
related literature and identifies the need for further research. We
then present the methodology, the research process we employed, and the
interview sample in Sect. 4. Sections 5 to 7 present the findings,
identify relevant areas, systematize and discuss OC forward distribution
and return concepts. Sections 8 and 9 summarize findings, relate them
to the literature and discuss further areas of research.
Conceptual background and basic terminology
This section
structures the research field by defining OC distribution, which is
required before the related literature can be identified and analyzed. We compile current concepts of distribution in OC
retailing and define basic terms.
We
focus on the distribution concepts of retailers who operate both
bricks-and-mortar stores and a distance channel, and refer to these
retailers as "omni-channel" retailers. In practice, several different
terms and definitions have been developed for retailing in multiple
channels. Among others, "multi-channel", "cross-channel", and
"omni-channel" are often used interchangeably and without clear
distinction. However,
Verhoef et al. claim that recent concepts from literature and
practice tend towards seamless OC retailing, where the boundaries
between physical and online retailing disappear This
definition of "omni-channel" is based on the customer's point of view.
It underlines the difference between it and "multi-channel", where
distance and bricks-and-mortar retailing do not overlap from a
customer's perspective, even though a retailer operates in both fields.
By this definition, the channels are not physically linked in
multi-channel retailing.
Because we want to get the broadest
possible view of the logistics systems relevant in practice, we refer to
distribution in multiple channels as "omni-channel" distribution, since
this is the overarching term and most advanced concept. Consequently, we
investigate the structures and processes needed for OC distribution,
where retailers aim to integrate operations and physical product flows
to provide a seamless shopping experience. The overarching idea is to analyze the distribution
systems that enable customers to complete a purchase and receive orders
from any channel they choose. For example, a customer can buy a product
in a webshop and choose either home delivery or in-store pickup, and
may have similar options for product returns. Since we concentrate on operational distribution systems, we do
not make a distinction between the customer interfaces for shopping,
e.g., in-store, webshop, mobile commerce, catalog, or phone. We
investigate how operations and logistics function for physical stores,
the direct-to-customer channels, and the links between channels.
An
OC retailer's distribution system encompasses not only the delivery of
goods to stores and customers, but also backward distribution concepts,
since products purchased online require options for customers to return
products, if they do not want to keep them. As seen from the perspective
of an OC retailer, the forward (1) and backward (2) distribution
systems must therefore be taken into account.
(1) The forward distribution system is usually characterized by its sources (=dispatching locations), destinations (=points of reception) and associated links. To understand distribution systems within OC retailing, we need to consider the different types of sources (e.g., DCs and stores) and destinations (e.g., stores and customers) in the physical distribution structure, as well as possible delivery processes and modes, i.e., shipments to customers and stores.
(2) The backward
distribution system encompasses the physical flow of product returns
from the customer to the retailer, and the locations where returns are
processed (e.g., return centers). Backward
distribution therefore covers shipments from customers and stores. An
alternative name for this dimension would also be "returns" or "reverse
logistics".
Related literature and research questions
The literature review follows the guidelines for systematic review. First, we defined the scope (as in Sect. 2), and then identified the related literature. The identification step included the material collection/selection and category selection. Finally, we completed a qualitative content analysis. This builds the foundation to develop the research questions in 3.3. Prior to the literature review, we contacted a range of experts in practice and academia in the field of OC distribution to learn on what they believe are the relevant questions for both industry and research. These preliminary discussions helped to define the scope of the research and to set the boundaries of the literature search. We developed a review protocol, including a conceptual discussion of the research problem and a statement of its significance. Finally, we developed the research questions in multiple rounds by iterating literature reviews, updating the review protocol and conducting discussions with experts.
Literature collection/selection and category selection
The
development of distribution concepts for OC retailing has emerged in
practice very recently, and the number of
related scientific publications is still limited. Against this backdrop,
a structured literature review in the form of a qualitative content
analysis is seen as a practicable method for obtaining evidence-based
management knowledge. Our systematic literature review covers two lines. First, because
the topic is relatively new and discussed in practitioner-oriented
forums, we conducted an Internet search in this field. Second, we
conducted a search of peer-reviewed, international research journals.
The
first search included a review of practitioner-oriented publications
(without a peer-review process). The topic of OC retailing currently is a
practice-driven effort. Most reports on related topics are published by
consultants and associations. To get an updated view of the market, we
therefore leverage these sources in our empirical findings.
The
second search, completed simultaneously as an iterative review, included
all major international journals that publish research on distribution
management and/or OC retailing. Furthermore, we utilized initial search
results from open databases (Google Scholar, ssrn), library service
databases (Ebsco, Scopus, Metapress), and major publishers
(Emeraldinsight, Informs, Sciencedirect, Springerlink, Taylor &
Francis, Wiley), and checked literature cited in identified papers.
Related keywords in the full text searches included all forms of e-tail,
e-commerce, online-, cross-, multi-, omni-channel retailing, including
plural forms (e.g., "channels"), delimiters (e.g., "omni-channel"),
prefixes (e.g., "across"), and suffixes. All forms of the keywords from
logistics relating to supply chain management, distribution, logistics,
physical product flow and returns were also selected. The related
keywords from retailing and logistics were combined for the search.
However,
it is important in a literature review to define distinct boundaries. Because we focus on operational
systems, we excluded literature that strictly covers general management,
marketing and service management issues, and does not discuss
logistical aspects at all. This literature mainly addresses customer
behavior in multiple channels and the organizational relations between
channels. Furthermore, due to the advent of online commerce in the late
nineties, we limited the search to issues published after 2000. Although
OC retailing has some features that are related to pure online
retailing, we excluded literature from single-channel e-commerce, since
it is unclear how the requirements for online retailing will apply to OC. Because we focus on non-food retailing, we also excluded papers
restricted to food distribution. We used a qualitative content analysis
to identify the conceptual content that is related to our field of
research.
Papers were assessed based on whether they address problems of physical
product flows and/or operational logistics interfaces between channels.
To
increase the reliability of the research, databases, journals, and
individual papers were checked by a second researcher and updated
iteratively during the revision cycle of the paper by the entire team of
authors.
Literature review
To structure the content analysis, the literature review distinguishes between the overarching structural dimensions of the forward and the backward distribution system.
Literature on forward distribution
Swaminathan and
Tayur identify in their review article that channel integration
has advantages for supply chain management with respect to profit,
inventory reduction, and customer service, but central control is
necessary. They describe among other issues supplier relationships,
pricing, customization, and real-time decision technologies that have
grown in importance with the prevalence of e-business in traditional
supply chain management. They present an overview of analytical research
models for e-commerce supply chains. Inventory allocation and
coordination constitute the major areas of their research, where
distribution designs are already determined. Within the e-fulfillment
context, Swaminathan and Tayur further review certain papers
presenting drop-shipment strategies (i.e., direct deliveries from
suppliers) and see those as a way of improving supply chain and
inventory efficiency.
Within their literature review, Agatz et
al. analyze among other topics the distribution network design.
They systematize possible network designs into integrated fulfillment
(common DCs for the different sales channels), dedicated fulfillment
(dedicated DCs for the different sales channels), and store fulfillment.
They point out the trade-off between inventory pooling and delivery
efficiency. The models analyzed by Swaminathan and Tayur and
Agatz et al. mainly take on a single-channel perspective,
focusing on e-fulfillment. Agatz et al. therefore conclude that
there is a lack of literature dealing with the logistics interactions
between e-commerce and traditional retailing, thus missing a perspective
across channels. Lang and Bressolles derive from the literature
four different e-fulfillment systems for retailers that operate multiple
channels. They structure it according to order preparation (in a
central DC or store) and delivery to the customer (home delivery and
pick-up in - store). The authors summarize their discussions with eight
French retail companies about these e-fulfillment types and economic
performance as well as customer expectation indicators. However, they do
not analyze the synergies with store fulfillment, and they discuss
effects based only on a limited number of case studies.
In
addition, a first set of papers looks at the inventory location problem.
Alptekinoğlu and Tang analytically study whether online orders
should be fulfilled from physical stores or from a DC. They conclude
that expanding bricks-and-mortar DCs for OC distribution pools inventory
risks. Liu et al. develop a capacitated location model for
retailers with multiple channels. In doing so, they decide which of a
retailer's existing bricks-and-mortar DCs should be extended to fulfill
distance retail demand, thus making them OC operational. Therefore,
within the model, they decide whether a retailer should rely on a full
integration of bricks-and-mortar and distance retail channels or on a
mix of dedicated bricks-and-mortar DCs and integrated structures.
Netessine and Rudi analyze the dual strategy in a non-cooperative
game between retailers and wholesalers, where retailers use their own
inventory as a primary source and rely on wholesaler's drop-shipping as a
backup. They derive conditions under which either traditional
retailing, drop-shipping or dual channels with a separate manufacturer
and retailer customer interface are beneficial in terms of inventory
holding costs and risk pooling aspects. According to their findings the
drop-shipping markup and the differences in transportation costs are the
main drivers of the choice of channels. Also Chiang and Monahan review different forward distribution strategies, where items are
stocked at a manufacturer DC or a retail store. A complete separation of
channels, however, is not taken into account. Although their main focus
is on inventory policies and allocation, they show by examining
different distribution designs (store-only, distance-retailing-only, OC)
that OC outperforms single-channel strategies.
Neslin et al., Wolk and Skiera and Cao and Li analyze the
financial and economic performance of strategic decisions for opening an
Internet channel in terms of e.g., channel mix, channel design, level
of channel independence, and resource allocation across channels.
However, the specific design of the distribution systems remains open.
Further literature exists that focuses on OC fulfillment issues, such as
inventory management, allocation and control or capacity management, but it does not analyze the effect on distribution.
Hübner et al.provide a framework of OC warehouse operations
designs and interdependencies without investigating concepts for
physical distribution.
Focusing on OC destinations, McKinnon and
Tallam classify the main forms of unattended home delivery,
whereas Fernie et al. classify home delivery options in general.
Agatz et al. identify the advantages of store pickup concepts,
namely bridging the "last mile" and any positive effects on
cross-channel sales. They highlight service components that are inherent
to e-fulfillment. An online channel not only involves a physical
product, but also several related services, most notably delivery. Their
analysis is based on Boyer et al., who examine e-service
strategies, including delivery processes. Rabinovich et al. show
why strictly Internet-based retailers leverage external logistics
service providers (LSPs) for distribution, whereas Rao et al. show that retailers with web offerings and stores outsource their
logistics to a lesser extent than web-only retailers. Rabinovich and
Bailey, Xing and Grant and Xing et al. investigate
the physical distribution service quality differences between pure
players and MC retailers. Pure players are perceived to deliver higher
service quality. In this context, Xing et al. develop a framework
for order fulfillment to achieve electronic physical distribution
service quality. Xing et al. analyze the interface between LSPs
and retailers and the impact of LSPs on customer perception. Gallino and
Moreno analyze the demand effect of "buy-online,
pick-up-in-store" and show a cross-selling and channel-shifting effect
for the stores. Bell et al. investigate the migration effect when
retailers introduce a showroom store for product testing, but deliver
items to the customer's home.
Literature on backward distribution
Product
returns for distance sales have been viewed as an unavoidable cost of
doing business. Brito and Dekker classify them as reimbursement
guarantees that "give customers the opportunity to change their minds
about purchasing […] when their needs or expectations are not
met". Fleischmann et al. survey the field of reverse logistics
and develop a general framework. They identify three planning areas
related to returns, namely distribution, inventory, and production.
Brito and Dekker develop a general framework for reverse
logistics by structuring according to return reasons, product types,
recovering processes, and involved parties. However, they do not discuss
the specifics of retailing and home delivery. We further refer to
Carter and Ellram, Dekker et al., Bernon et al.,
Rogers et al. and Govindan et al. as overviews,
compilations of reverse logistics frameworks and case studies on general
return management problems.
While there is extensive literature
on return policies to minimize customer returns in online retailing and estimate return
volume, very few publications exist that deal
with how retailers organize the backward process of customer returns. Only a few studies address the number and location of
return centers where returned products are collected and reprocessed.
Koster
et al. and Hübner et al. discuss operational
return-handling processes in warehouses, but do not focus on physical
product flows to and from stores and customers. Agatz et al. consider return handling as part of distribution service design. They
remark on the scarcity of optimization models for return policies in
e-fulfillment, especially in contrast to end-of-life returns. Yalabik et
al. model with game theory return systems for buy-back contracts
for supply chain coordination with regard to logistical efficiency and
marketing effectiveness, showing the trade-off between both. Min et al. develop an algorithm for a multi-echelon reverse logistics
network design for an online retailing case. The model makes
location/allocation decisions for the initial collection points and
centralized return centers, based on the trade-offs between freight rate
discounts and inventory cost savings resulting from consolidation and
transshipment. Ruiz-Benitez and Muriel assess the impact of
returns on wholesale price, order quantity, and the coordination of a
decentralized supply chain with a single manufacturer and a single
retailer. They analyze how consumer returns impact the decision-making
processes of the retailer and the manufacturer, and the resulting order
quantities, transfer prices, and related coordination mechanisms. In a
similar setting, Bernon et al. explore practices that enable
supply chain integration between manufacturers and retailers in retail
product return processes.
Summary of related literature
Swaminathan
and Tayur and Agatz et al. are the first to derive from
the literature basic design options for distribution issues in
e-business. They identify a closer interaction between fulfillment for
e-commerce and stores as a future area of research. Further literature
focuses either on single planning problems, or is based on predetermined
distribution structures. These papers are mostly relevant for pure
online retailing. The insights on e-business are only partially relevant
for OC distribution,
because the OC concepts require integration of the bricks-and-mortar
channel with the distance channel. Specific analyses of the operational
implications for distribution systems of retailing across channels
remain scarce. Boyer et al. identify
the assessment of the different distribution design options as a future
area of research. Rao et al. see a "very interesting question for
future research" in how OC retailers can piggyback on their existing
infrastructure to integrate the logistics for online and store
fulfillment. Gallino and Moreno also see the need to explore the
integration of online and offline channels. Because this is a recent
phenomenon, they conclude that it is not surprising that there is
limited literature on the subject. Grant et al. call for further
research in the area of integrated on- and offline retailing to get a
broader scope of opinions and obtain a more representative result.
Kozlenkova et al. underline the lack of knowledge on the
operational implications of innovative distribution channels. "Both
theory and practice will be improved if research develops a better
understanding of the effects of adding/removing channels to existing
distribution systems". This requires the
systematization and analysis of multiple channel distribution.
Hence,
because of the underdevelopment of the systematization of distribution
in OC retailing, and the dearth of extant literature on the operational
aspects of OC retailing, there is a strong need to study and structure
physical product flows for forward and backward distribution, their
application requirements, contextual factors, and pros and cons.
Furthermore, the vast majority of research papers in the area address
distribution using analytical models and do not derive or test the
findings empirically.
To extend the literature within this new
area of OC distribution, we conducted an exploratory study. Exploratory
studies are appropriate to investigate the hows and whys of a
little-known area, also for logistics topics. Trautrims et al., and Randall
and Mello identify qualitative methods as a path to provide new
insights into retail supply chains. They see qualitative research as
appropriate particularly to uncover so far unknown problems using a
holistic approach.
Research questions
In view of the gap in
the literature, we formulated three main objectives for our research to
close this gap: The first objective is (1) to learn more about the
relevant issues influencing logistics services and costs in OC
retailing. On this basis, we then want (2) to understand what the
present structures and processes are in OC distribution, how they can be
systematized, and what the fundamental requirements are for their
applicability. The second objective leads to the third (3), i.e., to
determine the advantages which these concepts offer for logistics
services and costs, the challenges that emerge when implementing and
using these concepts, and the development phase of an OC distribution
system in which these concepts are appropriate to use. In an exploratory
study, where a vast amount of qualitative data are collected, the
research questions should address general topics and
in our case are formulated as follows:
RQ1 Which issues in OC distribution are relevant for achieving excellence in an OC logistics system
RQ2 What are the existing structures and operating modes of OC distribution? How can these concepts be structured?
RQ3 Why are different forward and backward distribution archetypes applied,
and what are the requirements, important contextual differences,
criteria, and development areas for implementing them?
The
research questions are worthwhile addressing for at least three reasons.
First, OC retailing is a very recent phenomenon. So far the key issues
from a practical point of view for achieving excellence in OC
distribution in terms of service and cost remain open. Therefore, one
contribution is to identify the top issues that retailers face when
establishing and developing OC distribution systems. This builds the
basis for an understanding of OC distribution designs and the strategic
rationale behind certain configurations and developments.
Second,
OC retailing is increasing the need for seamless product flows across
channels and, therefore, requires an up-to-date overview of potential
logistics concepts. As a result, the literature lacks an empirically
proven and systematic perspective on OC distribution structures. Another
contribution, therefore, is to identify and systematize OC distribution
designs and typologies across non-food retail sectors.
Third, as
noted in the previous literature, it is still unclear which degree of
integration, delivery modes, lead times or shipping models are the keys
to success in OC retailing. It is, therefore, of interest to understand
which distribution concepts retailers rely on today, how they are
configured, and why retailers apply them. Virtually all retailers
currently are assessing their options for creating service- and
cost-optimized distribution concepts across the channels. Therefore, it
is of further interest to know how logistics concepts for multiple
channels can lead to OC retailing and, if well-executed, how they
increase company performance while maintaining customer satisfaction.
Another contribution, therefore, lies in deriving the qualitative
benefits of the concepts. This also requires a discussion of
cross-industry and industry-specific challenges, areas of application,
and contextual factors.
Methodology
Our structured literature review showed that physical
product flows for forward and backward distribution in OC retailing are
not yet systematically studied. Hence, the research questions target to
identify and systematize distribution designs, key issues, and
contextual factors. The research questions, therefore, focus on an open
and unexplored area. Exploratory studies are appropriate for such
conditions.
The primary source for our exploratory study were
semi-structured interviews with OC retailers as suggested, e.g., by
Trautrims et al. Quantitative market data, reports, and
discussion with further experts in the field served as a source of
triangulation for the ideas that emerged from the qualitative data. To meet the criteria for trustworthiness during data collection,
we used multiple approaches as suggested by Lincoln and Guba and
detailed below. We adopted an interpretive research approach, which, in
the interpretation of concepts in a first-order analysis, gives voice
to the managers actually designing OC distribution concepts. The insider's point of view was the foundation of our inductive
analysis. Following this, we as researchers took on the task of
formulating deeper, more theoretical, and conceptual second-order
interpretations.
Section 4.1
details the methods applied for data collection. Section 4.2 then
presents how we derived the results from the data collected.
Data collection
First, we provide details about our semi-structured interviews, before we shortly portray our sources of triangulation.
Semi-structured interviews
We
selected a semi-structured research design based on face-to-face and
direct communication with executives. Expert interviews are a suitable
instrument for data collection because the experts' knowledge of the
design, implementation, and control of solutions stems from their
position within the companies. The aim of these exploratory
discussions was to gather information and systematize structures without
formulating restrictive hypotheses in advance. Knowledge was gained in a
recursive dialogue between researchers and reflective practitioners.
Prior to collecting primary data, we
used pilot interviews with consultants to understand the current status
and challenges in OC distribution. The main goal of these interviews was
to become familiar with the key change issues. We selected this
particular group for pilot interviews because of its lead role in
developing distribution and return concepts.
Following the pilot
interviews, formal interviews were conducted over a six-month period
until we reached theoretical saturation (see details on sample below).
The interview guide used for the initial round of interviews was based
on the product flow from the retailer to the customer and vice versa,
tested and refined in initial pretest interviews.
Questions could be asked at any time to allow the conversation to flow
naturally. The interviews lasted between 60
and 120 minutes. The anonymity of participants was protected through a
written agreement and did not allow interviews to be recorded. Field
notes were, therefore, written during and immediately after the
interviews.
To meet the criteria for trustworthiness, we
interviewed in teams and discussed and checked the information gathered.
All interviews were conducted by two of three interviewers, one of whom
attended all the interviews to guarantee comparability. As one
interviewer handled the questions, the other recorded notes. This
enabled us to interact personally with informants, while the note-taker
retained a different, more distant view. Given that
the interviews relied on multiple informants from different companies,
however, no informant's interpretation dominated the study. The
interviewers met regularly with other members of the research team to
debrief them on preliminary findings. This means that team members not
involved in the interviews were able to probe for further insights,
suggest means of gaining additional clarification, recommend next steps,
and challenge the interviewers by suggesting alternatives for tentative
initial findings.
Challenges and options of distribution
concepts were discussed from multiple perspectives. The initial
interviews focused on structures of OC distribution systems, strategic
issues, and most recent developments in the market. As nine themes (see
data analysis) emerged from the data, we focused the interviews on
investigating those themes in greater depth, which facilitated our
effort to uncover both patterns and differences across retailers and to
identify relationships among concepts.
During the sampling
process we first identified potential participating companies, before
identifying interviewees from these companies. We used theoretical
sampling in four steps until we reached preliminary theoretical
saturation with regard to insights from additional interviews. The target retailers had to fulfill four criteria:
(1) OC retailers, (2) operating in non-food retailing, (3) with
significant experience in the business (i.e., at least one year in
distance retailing via an online shop and at least five years in
bricks-and-mortar business), and (4) of a significant size in terms of
sales and number of outlets (i.e., at least EUR 200 m. annual sales and
at least ten outlets in German-speaking countries). The scope of the
investigation covers OC retailers only. Retailers are referred to as
belonging to OC retailing if they have a distance sales channel as well
as bricks-and-mortar outlets. Furthermore, the retailers had to have
been active at least for one year in both channels. OC retailing is more
advanced among non-food retailers. To get a broad
understanding and avoid looking only at product-specific phenomena, we
invited non-food retailers across multiple sectors, namely fashion,
consumer electronics, DIY, and specialty retailers. The challenges for
integrating on- and offline distribution concepts are especially
relevant for large retailers with established distribution networks and
economies of scale in this area. The company sample was, therefore,
derived based on the latest industry rankings of official statistical
data, which use annual sales as a criterion.
We started by
inviting the top 25 retailers with OC business. Ten of
these 25 participated. After the interviews, we further reviewed
practitioner-oriented journals to identify retailers who published
recent changes in their OC business models. We invited ten additional
retailers who met the above criteria and had not yet been included.
Three of ten agreed to participate. Because we were still gaining more
insights from every interview after an intermediate data analysis, we
assumed that we had not yet reached saturation level in the data, and invited further top 25 OC retailers from
sector-specific rankings. We also wanted to balance our sample better in terms of
origin (distance or bricks-and-mortar channel as the first channel),
experience in OC logistics (more than five years vs. less experience),
and across non-food sectors. This resulted in another 15 retailers that
participated. The coding and categorization did not significantly change
further during the completion and analysis of this sample set,
especially with the last retailers in this set. No further advances,
advantages or requirements were gained for the various concepts in OC
distribution. We were, therefore, able to identify clear patterns and
replicate the development of the theory, but not extend it further.
A participation rate of approximately 50 % was
achieved, with 28 retailers taking part in total. These included 14
retailers from fashion, two from consumer electronics, five from the DIY
sector, and seven other retailers (e.g., specialized retailers,
department stores). The participating retailers have their headquarters
in a German-speaking country and operate in 21 countries on average. The
retailers' total annual sales average EUR 5.9 bn, with a maximum of
more than EUR 40 bn and a minimum of EUR 200 m. In Germany,
participants' sales represent about 40% of total sales in the OC fashion
market, about 60 % in OC consumer electronics and almost the entire
market for DIYs. The companies interviewed have been active in OC
retailing - including operating an online shop - for between one and
more than ten years.
During the interviews we learned that
logistics service providers also play a key role in OC distribution.
Therefore, we expanded the scope and invited the top 10 service
providers in retail logistics, of which five
participated.
We assume that people constructing their
organizational realities are "knowledgeable agents". Experts in
organizations know what they want to achieve with their actions and can
explain their intentions. The
consequence of this assumption for conducting research is profound. The interviews were conducted
exclusively with board members, managing directors, and division
managers, who have a holistic view of the distribution structures.
Current actions are strategic decisions in this context. Therefore, it
seems appropriate to use top managers as knowledgeable agents.
In
total, we interviewed 43 top managers from the first and second
hierarchy level with responsibility for supply chain management (27
managers), e-commerce (eight managers), or cross-functional units (eight
managers). The selection of experts was based on the fact that they are
informed and experienced in OC forward and backward distribution, i.e.,
they have been directly involved in the planning and execution of such
systems.
Primary market data
We also amassed market data
relating to OC logistics for triangulation. We collected
primary data from 100 large retailers' websites and their offerings in
OC distribution. Other documents included strategy statements,
newsletters, performance reports, and articles in professional journals.
We used the documents as a secondary data source, providing insight
into the context and for substantiating constructs. These documents also
helped to facilitate discussions with the informants about the themes
that emerged from the data. Although this information was not
extensively used, it helped us to appreciate the context in which
systems are enacted.
Data analysis
Our inductive analysis is
neither driven by deductive logic nor follows a strict grounded theory
approach, because "data
is inextricably fused with theory". We
cycled among data, emerging theory, and relevant literature to develop a
deeper knowledge of OC forward and backward distribution systems. Our
approach relies on continuous comparison of data and theory development
and the overlap of data collection and data analysis.
During the analysis, the transcripts were rephrased, reflected, and
compared to create typologies.
We
used two major methods to ensure the trustworthiness of our data
analysis. First, we used three distinct coders, compared codes with each
other, and reached a sufficient degree of similarity. We further used two outside coders to assess our
coding scheme independently to increase confidence in our assignment of
codes to appropriate categories. Disagreements,
either between the researchers or between the researchers and the
outside coders, were discussed until a consensus was achieved. This
additional step helped to ensure the repeatability of our findings and
the emergent theoretical framework. Second, we
triangulated the emerging findings with literature and further market
data and completed "member checks". During this phase we leveraged
related literature from retail forward and backward distribution (both
bricks-and-mortar and e-commerce) to refine articulation and emergent
concepts and relationships. Furthermore, we
conducted "member checks" with our interviewees to gain confidence that
the emergent theoretical framework was sensible as well as realistic and
validated by those in charge. We developed an intermediate report of
our findings, shared this with all participants, and asked them for
feedback, which was also incorporated. Early results have additionally
been discussed at multiple research conferences.
Our initial
approach was a first-order analysis involving a thorough coding of the
interview and meeting transcripts. We developed a detailed
coding scheme consisting of 51 first-order codes in the
informants' language and consolidated them into 18 informant-centric
categories. Using the constant comparative method,
we repeatedly compared data over time and across interviews to discern
the major concepts of interest. We relied on the retailers' own language
as the source of our concept labels wherever possible. We used short phrases expressed in first-order terms in
cases where a code was not directly available or violated
confidentiality agreements. We used an appropriate software application
designed to aid in coding and analyzing text throughout the entire
process.
To discern themes that might constitute a basis for
developing a theory, we used a structured second-order analysis to view
the data at a higher level of theoretical abstraction. We again used constant comparison techniques and the relationship
between second- and first-order themes. After
again examining category nesting and overlaps, nine second-order themes
emerged: fields of action in OC forward and backward distribution,
level of network integration, development plans for network
configuration, forward distribution structure, qualitative criteria in
forward distribution, development plans for forward distribution, return
processes, qualitative criteria for return structures, and development
plans for return processes.
In the third stage of our analysis,
we grouped our major themes into aggregated dimensions. This process
involved the relatively straightforward task of examining the
relationships among first-order concepts and second-order themes and
distilling them into a set of more simplified, complementary groupings.
Three aggregate dimensions resulted: Excellence in OC distribution,
forward distribution (containing a typology and related archetypes for
OC dispatching locations and destination concepts), and backward
distribution (containing a typology and associated OC return modes and
processing locations).
This also provides us with a structure for
our findings in the remainder of the paper, summarized in Fig. 1.
Section 5, therefore, answers RQ1 by identifying the major issues
encountered when striving for excellence in logistics services and costs
in OC distribution. This leads to a discussion of distribution
typologies for forward and backward distribution in Sects. 6 and 7.
Section 6.1 answers RQ2 by developing a typology for forward
distribution. This builds the framework required for investigating RQ3
in relation to dispatching locations (Sect. 6.2) and destination
concepts (Sect. 6.3) in forward distribution. Section 7 first develops a
typology for backward distribution in the same way (Sect. 7.1) and then
investigates return modes and return processes (Sects. 7.2 and 7.3). As
a result, the main sections analyze the prevalent archetypes for these
areas, investigate the pros and cons of these archetypes, and develop a
typology for forward and backward logistics in OC distribution.
Fig. 1 Overview of areas in omni-channel forward and backward distribution systems
Excellence in omni-channel distribution
What is noticeable is that hot topics (1) to (3) mostly relate to expanding services in OC retailing, while secondary topics (4) and (5) focus more or less on reducing logistics costs. Further topics with lower relevance that were mentioned multiple times aim to improve overall warehouse and store operations, make it easier to expand to additional markets and integrate the IT landscape across channels. Almost all participants stated that improving and enhancing forward and backward distribution concepts plays a dominant role in designing fulfillment and logistics systems for OC retailing. These fields of action and the associated explanations will further be used to inform the discussion of distribution typologies and to investigate the associated contextual factors.
Beside the main distribution process in OC retailing, i.e., fulfilling customer orders, additional ancillary processes emerge. For example, in the online business, efficient return processes are required, ensuring that returned products are instantaneously worked up and reintegrated into the forward distribution system. The following two sections develop typologies for OC forward and backward distribution and analyze the associated concepts.
Concepts of omni-channel forward distribution
Within forward distribution, we first provide an overview of prevalent concepts existing in practice and develop a typology. We then discuss the concepts within two subsystems, namely the OC dispatching location (=source of distribution) and the OC point of customer reception (=destination of distribution).
Omni-channel forward distribution typology
By analyzing the literature on related e-commerce retailing, practitioner reports, primary market data (e.g., webpage search, retailer reports) and ultimately the results of our interviews, we have been able to develop a comprehensive overview of forward distribution design concepts existing in practice. Figure 2 illustrates the different concepts of deliveries which are denoted from (1) to (6). They can be structured into the following overarching categories. First, store delivery (SD) represents traditional distribution concepts of bricks-and-mortar distribution resulting in in-store buying. Second, there are home delivery (HD) concepts, and third, different store pickup (SP) concepts. Thereby (SD) and (SP) have the bricks-and-mortar store as a destination, while (HD) serves customers at home or alternative pickup locations. Within each category there are different design possibilities which are summarized below.
Fig. 2 Typology of omni-channel forward distribution
SD Bricks-and-mortar stores and customers buying in-store (1) constitute the traditional part of OC retailing for retailers originating from the bricks-and-mortar business. The stores are thereby served directly by the supplier or by the OC retailer's DCs. In an OC context, the DC can either be bricks-and-mortar-specific if the retailer relies on separate distribution channels or integrated in terms of fulfilling bricks-and-mortar and distance retail orders.
HD Home delivery concepts constitute the classic form of forward distribution for distance retailing. There are three basic types depending on the source of the forward distribution process (2)–(4). The first type is home delivery from the DC (2). An alternative is a drop shipment strategy (3), where customer orders are directly served from the suppliers. In an OC context, the physical stores are the third pillar for home delivery concepts (4), where retailers ship orders directly from the store.
SP The different types of store pickup
(="buy online, pick up in-store") (5)–(6) are fundamental elements of
OC forward distribution concepts as they lead to a convergence of
channels. This gives OC retailers the chance to integrate their retail
outlets to bridge the "last mile" of delivery. The first type is
click-and-collect (5), where orders are shipped in customer-ready picked
parcels from a retailer or supplier DC to the stores. Applying separate
channel structures to the retailer DCs, the parcels are dispatched at
the distance retail DC and then shipped to the outlet as in standard
home delivery. When integrated DC structures are used, click-and-collect
orders can be shipped as part of the regular bricks-and-mortar store
delivery from the DC or separately with CEP deliveries. This mainly
depends on the store delivery frequency. Supplier drop shipments are a
further delivery concept for click-and-collect from a warehouse to the
store. If retailers are able to establish real-time data access to
in-store inventories and in-store picking capabilities, the
click-and-reserve concept (6) can be implemented and online orders can
be served directly from the available store inventory.
These OC forward distribution types that exist in practice can be combined in a portfolio of delivery options. When defining the individual retailer's portfolio, the trade-off between service for the customer, required delivery velocity, processing costs as well as process complexity must be offset. As the forward distribution concepts combine of different dispatching locations and destination concepts, we will discuss these areas in more detail in the following two subsections. The qualitative analysis will help retailers to define their mix of OC forward distribution types.
Archetypes of omni-channel dispatching locations
OC retailers basically have three types of locations from which they fulfill customer orders. Direct customers, for example, can be supplied from a retailer's DC , one of its outlets, or directly from a supplier's DC. In contrast, store orders generally are supplied from a retailer's DC or a supplier's DC.
Retailers' DCs
Retailer DCs are the basic
source for OC forward distribution concepts. They are used for store
delivery in classic in-store buying concepts, as well as for home
delivery (DC shipment) and click-and-collect. An OC retailer's DC
structure can be further differentiated according to (A) the degree of
integration of distance retailing and bricks-and-mortar DCs and (B) the
level of centralization within the retailer's OC network.
When
analyzing the retailer DCs, we initially have to distinguish between
integrated and separate DCs. Integrated means that the retailer operates
common DCs for both, bricks-and-mortar and distance retail, whereas
operating channel-specific DCs is classified as a separate DC structure.
Both types of DCs are equally common throughout all retail sectors
surveyed.
Retailers establish integrated DCs for
bricks-and-mortar and distance retailing because they allow them to
leverage inventory pools and allocate inventories to stores and distance
retail orders flexibly in the line with demand. This is especially
important as online sales are still quite difficult to forecast due to
high dynamics and the growth of e-commerce. Therefore, pooled DCs and
inventories support the availability of goods. The Head of Logistics of a
specialty retailer, that recently opened an integrated DC after
previously operating channel-specific DCs, describes this well as
follows:
"Using centralized inventories allows us to postpone the inventory allocation for distribution as long as possible".
Other
participants with integrated DCs see the advantages of having synergies
across the entire supply chain that enable better coordination of
inbound logistics and rapid allocation of goods to the channels with one
inventory control system. Furthermore, integrated DCs enable picking
capacity to be allocated more flexibly. According to the experts, it is
easier to integrate the processes if the shipment sizes for
direct-to-customer deliveries are similar to those for store delivery.
This is often the case if retailers operate small outlets (e.g., shoe
stores) and when the outlets are supplied very frequently (e.g., daily).
Integrated DCs also offer advantages if they are the dispatching
location in a click-and-collect concept. Click-and-collect orders can
then be shipped as part of the regular bricks-and-mortar store delivery
from the DC. A joint DC, therefore, offers cost advantages in the event
of a high or growing share of store pickup, because shipment fees for
click-and-collect parcels can be saved.
Former distance retailers
have advantages in establishing integrated DCs compared to former
bricks-and-mortar retailers, as they have the process know-how for the
more complex task of handling direct customer orders in warehouse
operations. Furthermore, integrative DCs can be established more easily
if the products are applicable for handling in (semi-)automated picking
and sorting machines. This requires relatively homogeneous products with
regard to their picking characteristics. Shoe retailing is a good
example of such conditions, as is fashion retailing in general. For
other sectors, such as consumer electronics and especially DIY, the
product heterogeneity in terms of the picking characteristics is a
greater challenge. But strategies exist even for these sectors which
support the operation of common DCs for both bricks-and-mortar and
distance retailing. For example, a DIY retailer operates an integrated
DC for storing and picking all those product ranges that are easily
shippable in parcels. Nevertheless, regardless of the integration
strategies, integrated DC locations for both channels increase the
complexity of warehouse operations.
Separate structures are,
therefore, a way for simplifying processes at the DCs. The COO of a
fashion retailer explains the reasons for separation as follows:
"We use a separate and external fulfillment center for our distance
retail shipments. Our main business is in brick-and-mortar retailing. We
do not have the experience for distance retailing nor the space in our
DC for additional direct-to-customer picking processes. We treat the
e-commerce fulfillment center like an additional store".
All
participants with separate DCs argue with the process-related advantages
of picking. Separate DCs simplify picking processes as these are
different for customer packets vs. pallets for stores. This is
especially true if the order volumes and the variety of different items
within one order in distance retailing differ greatly from
bricks-and-mortar store replenishment. The store order size depends on
delivery frequency and ultimately also on store shelf space and the
trade-off between inventory holding and transportation costs. For
example, shoe retailers replenish their small stores daily. Small order
sizes are shipped by parcel services just like for home delivery. In
contrast, fashion retailers usually replenish their stores only once or
twice per week with large order sizes. DIYs consolidate orders to
minimize transportation costs (e.g., for bulky items) and use their
large stores to hold inventory, whereas consumer electronics retailers
replenish with high delivery frequencies and small order sizes to save
the inventory holding costs generated by expensive slow-movers. The
customer order size mainly depends on the product type. For example,
basket sizes of consumer electronics are only a few items, whereas
fashion retailers need to pick multiple items for one customer order.
Some logistics managers argue that their bricks-and-mortar logistics
system is simply not capable of additionally handling customer picking.
This indicates that investments, especially in flexible or automated
picking systems, are necessary for the execution of integrated DCs. If
retailers try to avoid such investments, separate DCs are the logical
consequence. The retailers with separate DCs also see the advantages in
minimizing the risk when entering a new channel by using separate legal
entities for each channel. Some retailers with separate DCs rely on
external service providers for operating one of the DCs. However, as our
focus is on physical flows, the responsibility for the DC fulfillment
is rather a side issue and will not be differentiated in the following.
Summarizing
the results of the above discussion, two types of DCs can be derived:
separate channel-specific DCs and integrated omni-channel DCs. From a
customer service perspective, integration ensures greater product
availability. From an operational perspective, integrated DCs are
preferable if the retailer fulfills the prerequisites for integration in
terms of resources and capabilities in such a way that integrated
operations can be executed efficiently. In addition, integrated DCs
reduce transportation costs in a click-and-collect setting. Retailers
can separate logistics to simplify structures and outsource ancillary
functions to avoid investment risks. Separate distribution structures
are, therefore, often an initial concept in OC forward distribution,
whereas integrated DCs and consolidated inventories are advanced and
more complex solutions. Table 1 summarizes these findings.
Table 1 Summary of omni-channel retailer DC integration levels
Integration level | Separate channel-specific DC | Integrated omni-channel DC |
---|---|---|
Advantages | Simplified operational processes; economies of scale through specialization | Bundling effects for inbound logistics; higher overall service level through pooling inventory; lower average inventory levels; no inter-warehouse transshipments; lower shipment costs when applying click-and-collect; economies of scale in warehousing; capacity balancing effects |
Challenges | No cross-channel bundling effects for inbound logistics; higher average inventory levels; additional transportation costs for click-and-collect; inter-warehouse transshipments | Higher process complexity in picking and inventory management; higher space requirements at the DC; ability to execute heterogeneous orders efficiently |
Contextual factors favoring the respective type of DC | Large difference in order sizes between channels; large outlets; heterogeneous picking characteristics; manual picking systems; origin in bricks-and-mortar business | Small difference in order sizes between channels; small outlets that are replenished frequently; homogeneous picking characteristics; products suitable for parcel shipment; automated or flexible picking systems; origin in distance retailing business |
Development stage | Initial solution | Advanced solution |
The second issue in the analysis of omni-channel DC structures is the level of centralization, i.e., the area in which a DC is responsible for supplying customers or stores. A distinction can be made here between centralized DCs responsible for a large part or all of a customer or store area and regional DCs responsible only for a specific area of customers or stores. Regional DCs usually keep fast-moving items in their inventories. Most bricks-and-mortar retailers rely on several regional DCs to supply their stores from regionally distributed locations, the purpose being to shorten replenishment time and decrease transportation costs. Conversely, centralized DCs mainly keep slow-moving items for pooling inventories. Most items are stored exclusively at one of these levels, i.e., centralized or decentralized. Items stored at a central DC are delivered directly to stores and customers. If at all, regional DCs are used only as transshipment points for such products.
Concerning the requirement of short lead times for direct-to-customer shipments, the unanimous point of view of all experts interviewed is that the lead time within European retail networks for next-day delivery within one country cannot be improved via decentralization by using multiple regional DCs that are closer to the customers. If a retailer's DC is close to a hub of a CEP, later cut-off times for orders can be realized, as transportation time between the DC and CEP hub is shorter. The goods can be shipped overnight and arrive at the customer usually on the next day. OC retailers argue that late cut-off points for orders are more important for short lead times than creating regional DCs. Nine out of ten OC retailers surveyed use one single DC for direct orders. This is also due to the fact that the capacity of one DC is still sufficient to meet distance retail demand for the majority of retailers. Therefore, the prevalent type of DCs for direct orders of OC retailers is one centralized location for one market. Only a few fashion retailers with mature structures in distance retailing operate multiple distance DCs.
The picture for bricks-and-mortar store distribution, however, is different. Most of the OC retailers use further regional DCs for store replenishment. This is due to the fact that most large OC retailers used to be pure bricks-and-mortar players, who have a high proportion of sales in physical stores, have developed mature forward distribution structures in this channel, and operate a significant number of stores. A central DC has lower store delivery frequencies on average to realize bundling effects for longer distances to the stores. However, as stores benefit from shorter replenishment cycles and higher delivery frequencies that enable faster reactions on demand development, OC retailers continue to rely on regional DC systems for their bricks-and-mortar business, as several experts interviewed claim. This enables shorter cost-efficient replenishment cycles for the major part of their store assortment. Regional DCs can be found in all sectors surveyed. In the DIY sector, regionalization is very prevalent, one reason being that a large proportion of the items sold at DIY stores are very space-consuming or have special storage requirements, which can be better managed with multiple storage locations (e.g., plants).
DC type | Centralized DCs | Decentralized DCs |
---|---|---|
Advantages | Inbound bundling effects; higher overall service levels through inventory pooling effects; economies of scale in warehousing and picking; one centralized distance warehouse location sufficient for next-day delivery | Lower average transportation distance allows shorter lead time for store delivery and potentially higher delivery frequencies; potentially shorter lead time for customer deliveries |
Challenges | Higher average distance for home and store delivery, potentially resulting in higher lead time; heterogeneity of product ranges | Decentralized inventories; complex transshipment and cross-docking policies for central DC deliveries |
Contextual factors favoring the respective type of DC | Limited number of outlets and/or limited distance sales volume; geographically concentrated delivery area | High number of outlets and/or high distance sales volume; geographically extended network |
Main application | Distance channel | Bricks-and-mortar channel |
Retailers' outlets
OC outlets are showrooms and DCs at the same time. Outlets as dispatching locations are relevant for home delivery as well as for the store pickup concept click-and-reserve. Dispatching from an outlet is also required when retailers transship between stores. Transshipments are often applied at the end of the season to reduce inventories and to avoid stockouts and high discounts on leftovers. The focus of the OC-related analysis, however, will be on dispatching customer orders at the stores.Only one-tenth of the OC retailers surveyed regularly use outlets for distributing direct-to-customer shipments. The first type of OC retailers using this strategy already delivers items bought at the store to the customers. Examples of this type are the distribution of bulky goods in the DIY sector or white goods in consumer electronics. The product characteristics determine the distribution path, regardless of any OC activity. The second type of OC retailers operating customer shipments from the outlets is in sectors with large outlets, where every store represents a kind of warehouse. DIY, electronics, and department stores are typical examples. These retailers take advantage of the opportunity to offer a broader assortment via distance retailing if items are stored only at outlets. Fashion retailers, however, do not at present use the store as a dispatching location, although this might be an option for very large fashion outlets.
Forward distribution from the outlets increases the amount of handling effort at the stores and creates the need to establish processes to be able to handle distance retail orders efficiently. However, this will remain less efficient than order picking and distribution from the DC, as processes at the DC are specialized on parcel handling and the volumes that have to be handled are much larger. "In-store picking is our main cost driver as our outlets are optimized for presenting articles, not for efficient picking of online orders," argues a logistics manager at a department store retailer that already uses outlets for forward distribution. Furthermore, shipments from stores require real-time data access to store inventory and an integrated enterprise resource planning (ERP) system. In-store picking and packing also require dedicated space that cannot be used for the showroom. Store assortments are smaller than the assortment offered online at around two-thirds of the OC retailers surveyed. Deliveries from outlets to online customers, therefore, are very rarely applied by the OC retailers surveyed.
The challenges are similar when items are not shipped from the outlets, but reserved online by a customer and picked up at the store afterwards (click-and-reserve), as the IT requirements and the picking efforts are identical. Only the packing of a parcel is not required. Therefore, only about one-fifth of the OC retailers currently use this concept. However, click-and-reserve is expected to grow in importance, as it offers also several advantages compared to click-and-collect. It enables shorter order-to-delivery cycles than click-and-collect, as the desired goods can be picked up by customers immediately. Furthermore, click-and-reserve reduces the average transportation costs compared to click-and-collect. However, picking costs are higher at the outlets than at the DC. Click-and-reserve ultimately results in better product availability as orders can be supplied from both inventories at the DC and at stores. While click-and-reserve has been tested in most of the non-food sectors, it is only used to a very limited extent at present in fashion retailing because of several availability challenges. First, the high variation in cuts and colors leads to very few items being available in stores. This limits the number of available units for online reservations, since customers at the store may simultaneously be trying on these items or may have put them into their shopping basket. Second, items may be misplaced by store customers and their current location in the store might not be detectable with affordable effort.
Shorter order-to-delivery cycles are also an advantage for shipments from the outlet to customers, and they enable OC retailers to offer same-day delivery. This gives OC retailers a clear advantage in offering a same-day service compared to pure online retailers as they can leverage their outlets. Today all OC retailers' same-day orders are shipped from their stores. However, only about one-fifth of OC retailers place importance on same-day delivery. These have already implemented it or are piloting it for dedicated areas. Despite PR reasons, DIY and electronics retailers offer this service because customers might take advantage of same-day service in urgent situations, e.g., when working at buildings sites. However, the concept is not used in fashion retailing. Most OC retailers neither consider same-day delivery to be of value in future, nor have they implemented it or plan to do so. All retailers surveyed argue that customers do not expect same-day delivery services for non-food products and are only willing to pay for them to a very limited extent. Shipping fees, however, are high due to the increased effort required for processing and picking and the high costs of courier services, resulting in unprofitable same-day delivery concepts.
Suppliers' DCs
Summary of dispatching locations
Table 3 summarizes the findings on different dispatching locations and their impact on OC forward distribution design.Dispatching location | Retailer DC | Store | Supplier DC |
---|---|---|---|
Advantages | Inventory pooling; economies of scale in warehousing and picking; reduced in-store handling effort; larger assortments/item ranges than in-store | Leveraging of store inventory for distance retailing; enriching delivery concepts with possibilities for click-and-reserve and same-day delivery; lower transportation costs applying click-and-reserve | Lower inventory and processing costs for retailer; possibility to enlarging assortment (bulky items, slow movers) |
Challenges | Achieving efficient picking processes and economic inventory holding; shipment costs for click-and-collect to the store | Additional handling effort and two-stage picking (in DC and store); lower picking efficiency at store; store space requirement; real-time data exchange and IT requirements; higher transportation costs for home delivery | Higher lead times; advanced collaboration and data exchange with supplier required; lower customer convenience through limited options for order consolidation; potentially higher transportation costs |
Forward distribution concepts | In-store buying; DC shipment; click-and-collect | Store shipment; click-and-reserve | In-store buying; Drop shipment; click-and-collect |
Archetypes of omni-channel destination concepts
Optimizing of the "last mile" is the central driver for developments in OC forward distribution. A cross-channel shopping experience for customers generates opportunities for attracting and retaining customers. OC delivery modes need to fulfill customer requirements across the channels. A COO of a DIY retailer states that the main objective is "to create consistent, cost-efficient, and functioning delivery modes". This also changes the way the logistics department needs to think, as a Head of IT and Logistics at an electronics retailer that originates from bricks-and-mortar business denotes:"In multi-channel retailing, logistics is always in direct contact with our customers. Each mistake results in dissatisfied customers".
Besides traditional in-store buying, the archetypes of OC destination concepts can be divided into home delivery and store pickup. For non-food forward distribution, home delivery constitutes all delivery concepts that CEPs apply to bring parcels to the customers, e.g., to the door or to parcel stations. At least nine out of ten distance orders of the OC retailers surveyed are fulfilled via home delivery, but a growing importance is placed on store pickup, as the Head of Logistics of a fashion retailer describes:
"Store pickup is our major growth driver. The additional process costs are justified, as store pickup increases customer frequency and opportunities for cross-selling".
Store pickup increases the variety of delivery modes for higher customer convenience by allowing them to choose the preferred delivery location. Ultimately, outlets can act as pickup locations as an alternative to a parcel station. Especially OC retailers originating from bricks-and-mortar business consider store pickup to be an essential format for OC distribution. It allows them to generate higher frequency at their stores. Furthermore, the additional assortment available for pickup enhances the variety of products in the outlets. Almost 70 % of the OC retailers interviewed have already implemented store pickup solutions.
As the online trade is growing, this strategy can also be used to stabilize declining bricks-and-mortar sales and increase store managers' acceptance of an integrated OC strategy. Originally bricks-and-mortar retailers, furthermore, have a clear competitive advantage regarding store pickup as they have a widespread store network. However, they usually do not charge shipping fees on store pickup to increase store frequency. Retailers, therefore, need to bear the shipment costs, if stores have to be supplied separately via CEPs, which is the case for all the fashion retailers surveyed. Stores with a sufficient number of items per SKU on stock at their outlets can, however, leverage their store inventory for distance retailing. A prerequisite for this is an adequate IT system. In particular the large stores in the DIY and consumer electronics sectors have the privilege of using this concept.
In contrast, from the perspective of former pure mail-order retailers, store pickup is generally a costly service. The costs come from the additional in-store handling effort compared to home delivery and margin losses through bearing the shipping costs instead of earning a fee from customers for home delivery. Store pickup is, therefore, offered, but not actively advertised by this type of retailers. This highlights one of the major drawbacks of additional delivery modes, "they are costly". Shipping fees are only relevant for direct-to-customer deliveries. The fees demanded from customers depend on the competitive environment and country-specific traditions regarding direct deliveries. For example, in Germany only some fashion retailers that compelled to do so for competitive reasons ship absolutely free of charge. The non-fashion OC retailers charge shipping fees in dependence of order value. The main reason mentioned by all participants is that shipping fees generate significant additional revenue for the retailers. As long as customers are willing to pay, they will impose shipping fees.
Table 4 summarizes the various aspects of the destination concepts. The delivery modes offered represent an additional service for customers which increases their convenience. This additional service is highly relevant with respect to customer satisfaction and loyalty. In the future, retailers will expand the variety of delivery destination concepts. Almost all OC retailers are currently assessing new forward distribution options and pushing for a convergence of distance retailing and outlet processing. The COO of a DIY retailer summarizes his effort in terms of delivery concepts in a way that also reflects the discussion above:
"Our objective is to offer each delivery velocity and delivery service a customer wants to have and is willing to pay for".
Destination concept | In-store buying | Store pickup | Home delivery |
---|---|---|---|
Advantages | Direct customer contact; higher efficiency in DC picking and transportation; reduced risk for product returns | Direct customer contact; reduced risk for product returns; additional store frequency; virtual shelf extension; increased customer convenience | Increased customer convenience |
Challenges | Fixed costs for bricks-and-mortar presence; limited assortment/item range and shelf space | Cross-channel IT requirements; increased in-store handling effort; shipping costs for click-and-collect | Picking costs; lead time; potential shipping fees; handling of bulky items |
Relevant forward distribution concepts | In-store buying | Click-and-collect; Click-and-reserve | DC shipment; drop shipment; store shipment |
Concepts in omni-channel backward distribution
An OC retailer's distribution system also requires a backward distribution concept, since online customers demand options for returning the products they purchased if they do not want to keep them. Return processes are almost as important as forward distribution and attract major attention from OC retailers. They are crucial for customer satisfaction, especially in the fashion sector, since it is difficult for customers to choose an ideal product online. Some fashion retailers post return rates of between 40 % and 50 %. The director of a fashion retailer summarizes: "Returns are reality. We need to integrate them cost-efficiently into our business model".
Omni-channel backward distribution typology
As with forward distribution, we leveraged early (e-commerce) literature and the insights from our interviews to inform a typology of OC backward distribution concepts. Hereby, we classify the concepts first according to the return mode (CEP return (CR) and store return (SR)) and then further distinguish between the different processing locations. The different types (1)-(5) are depicted in Fig. 3.
Fig. 3 Typologies of OC backward distribution
CR The standard return mode is returning items via CEP. The returns are then shipped either to (1) a retailer's distance DC or (2) a specialized returns center (RC).
SR It is obligatory for OC
retailers to establish in-store return options additionally for distance
purchases. There are three different ways in which returns can be dealt
with. On the one hand, in-store employees can send the returns to the
DCs (3) or RCs (4) for further processing. On the other, returns can be
processed and reworked directly at the store and added to the stores'
inventory afterwards (5).
We will discuss these types in more detail within the following two subsections: focusing on the return modes and the processing locations that constitute the different concepts.
Archetypes of omni-channel return modes
Before
entering the OC business, bricks-and-mortar retailers mainly had
processes in place for returns of defective or rejected goods. The goods
were returned at the outlet where they had been bought. The
requirements for return processes are unequally complex within OC
retailing. This starts with the return options which build the first
pillar of our return process typology.
The standard mode is
returns via CEP delivery. This reduces integration and process
challenges for retailers across channels. Returning goods at the stores,
regardless of whether they were ordered in the distance retail channel
or bought in-store, is the second basic return mode. The following
statement of the Head of Logistics of a fashion retailer is a prime
example of this:
"We allow product returns in each outlet as a matter of course, regardless of where the product was bought".
Table 5 Summary of omni-channel return modes
Return mode | CEP return | Store return |
---|---|---|
Advantages | Simplified processes and reduced complexity for the retailer | Higher customer convenience; access to direct customer feedback; cross-selling potential; fast reintegration into the sellable store inventory |
Challenges | Additional transportation costs; time requirements for reintegration into sellable inventory | See CEP return if further processed with CEP to DCs/RCs; refunding issues and related IT requirements; in-store handling effort |
Development stage | Initial solution | Advanced and extended solution |
OC customers also want to select their preferred channel for returning items. Although all OC retailers surveyed agree that this is obligatory in the long run, it is not yet standard for all. While all retailers offer return with a delivery by a CEP, only half of the OC retailers surveyed explicitly state that they allow returns of goods ordered in the distance channel additionally at their outlets. The additional effort at the outlets, refunding issues, and IT requirements are reasons why retailers hesitate to roll out in-store return processes. Multiple return options for customers mean adjustments for in-store processes and the ERP infrastructure for cross-channel communication, but result in higher convenience for the customers. From this point of view, the most sophisticated OC stage with regard to return modes is reached when products ordered in distance retailing can not only be returned, but can also be directly refunded at the outlet. In-store returns can, however, bring further advantages for the retailer other than offering customers a convenient service. The direct contact with the customer who returns items can help to get information that contributes to tackling high return rates. Additionally, alternative items to the ones returned can be offered to the customer, thus leveraging cross-selling potential as well as possibly increasing customer satisfaction. From an operations point of view, in-store returns offer the possibility of quickly reintegrating returned items into the sellable store inventory. Table 5 summarizes the return modes discussed. Since speed is an important factor in returns handling, it is another potential advantage of in-store returns and will be further elaborated in the next subsection on returns processing locations.
Archetypes of omni-channel return processing locations
From an operational perspective, fast and efficient return processes are necessary. The faster the return processes the sooner the reworked products are available for resale. This is particularly essential for fashion retailers due to high return rates and relatively short seasonal periods. The return processing location itself can also be separated into different categories.Almost three quarters of the OC retailers interviewed process returns only at the distance retailing DC, where a dedicated area is reserved. One advantage of this processing mode is that reprocessed goods can quickly be returned to the distance retail inventory. A common strategy, therefore, is to process returned goods directly to the picking zone after checking and preparing. Another positive aspect of processing returns at a DC is that the DC's workforce can be assigned flexibly to picking or return reprocessing. This is an important factor because of picking distance retail orders usually peaks at the beginning of a week, while returns arrive at the DC one to two days later, so this system means that the workforce can be balanced. Notifications of returns by the customers before the products are sent back are used as a lever by several retailers to further improve workforce scheduling.
Another return processing location is a separate RC, operated by the retailer or a service provider. It is mainly used when return handling processes become too work-intensive and DC capacities are scarce. These centers are specialized in processing returns. Outsourcing return operations can offer potential cost savings if products are reworked in low-wage countries. This is why external RCs are used most often by fashion retailers with high return rates, because they can reduce their processing costs. However, in this case, a longer lead time for reprocessing has to be taken into consideration. This in turn is a challenge for fashion retailers with high return rates. In general, fashion items are only in demand for a limited period. Long lead times for reintegration into the sellable inventory may therefore lead to a loss of sales, if items are still being reworked and are unavailable. This illustrates the ambivalent nature of separate RCs, particularly for fashion retailers. A combination of processing returns at DCs and RCs is also possible. Goods that require more complex reprocessing are then shipped to the RC, whereas simpler reworking is carried out at the DC. Dedicated RCs are, however, only used by less than 20% of the OC retailers surveyed. The items are shipped from the RC to the DC after return processing.
A further option is processing returns in-store. Within this processing mode, goods need to be checked and reprocessed in-store. Reusable items remain at the store, whereas other goods are further processed to a central return location. This solution can be observed at retailers with large outlets, which have sufficient space for such operations. In this case, transportation costs can be saved, but additional labor costs need to be considered as well as synchronized ERP systems across channels to update the store inventory positions. About one-tenth of the OC retailers surveyed rely on a processing mix of in-store and in-DC. Nevertheless, as the Head of E-commerce at a fashion retailer states:
"Direct rework at the stores and integrating the products into our store inventory is the fastest option to get the returns back into our sellable inventory. As we have established lean in-store return processes, it is the most efficient option for us".
Processing location | Distance DC | Separate RC | Store |
---|---|---|---|
Advantages | Fast reintegration of returns into distance retail inventory; potential of workforce pooling and workload balancing | Specialized processing; potentially cheaper processing | Fast reintegration of returns into store inventory; transportation cost savings |
Challenges | Space requirements; processing in case of intensive rework; additional transportation costs if shipped from store | Time for reintegration into sellable inventory; additional transportation costs from store and to DC | Space and IT requirements; higher processing costs than in DC/RC |
Discussion
In this section, we discuss our empirical findings in the context of the literature. We contribute through this study to three main issues. We identified and systematized the forward and backward concepts used in OC retailing. We determined the areas of application and development required for achieving excellence in OC fulfillment and logistics, and finally we showed the need for developing sector- and context-specific OC distribution systems.
Systematization of concepts for OC distribution based on empirical data
The
retail distribution system was traditionally built as cost-efficient
approach for delivering goods to stores. However,
the advent of OC retailing has made the supply chain a consumer-facing
frontend. The fast growth
of pure online retailers has forced bricks-and-mortar retailers to
quickly build up e-commerce capabilities. However, in this race,
retailers frequently have failed to fully consider integration with
traditional store fulfillment. This has resulted in inefficient supply
chains and a lack of transparency across channels. What is more, the
vast majority of retailers believe they require a comprehensive
transformation, rather than an incremental change.
To
support retailers in these changes in logistics structures, we
systematized forward distribution according to source location (supplier
DCs, retailer DCs, stores) and destination locations (home, stores),
and we elaborated options for store delivery, home delivery, and store
pickup in OC distribution. Return processes were investigated in a
similar manner by distinguishing between source (stores, home) and
destination locations (stores, DCs, RCs).
The empirically
developed typologies and comprehensive systematization constitute an
addition to the literature. By analyzing market data and information
from 43 interviews, we have been able to develop a structured overview
of concepts existing in practice. Related framework papers are based on
literature reviews and not primary market data, and they focus mainly on
the aspects of e-channel fulfillment, rather than comprehensive OC
requirements. Swaminathan and Tayur and Agatz et al. discuss issues and general models from an e-fulfillment perspective.
Both derive their findings primarily from the literature. Similarly,
Fernie et al. describe the developments in e-tail logistics based
on single case studies, mainly in the context of grocery retailing.
Although OC retailing has some features that are related to e-commerce,
it is not clear how e-commerce lessons are valid for OC concepts.
We further contribute to the
literature by providing our specific findings for non-food distribution,
since previous literature focused on non-food warehouse management for
OC retailing and on grocery-specific
distribution issues with online retailing.
Qualitative analyses of distribution design concepts
The
broad empirical analysis supports the identification of contextual and
industry-specific factors affecting design choices, and challenges in
implementing the different distribution concepts. Our empirical findings
show that most retailers still rely on distribution concepts via a
central DC as a standard solution for achieving scale and pooling
effects. For this reason, deliveries are rarely made from stores or
suppliers. EY show that only 40% of retailers think that their
current execution of goods distribution is effective. Every third
retailer states that, "having a responsive, combined omni and
traditional supply chain infrastructure is a key success factor". The integration of the channels from a customer point of view,
and the implied insight into inventory, is a starting point, but not
enough. Successful OC retailers need to be able to fulfill demand from
any channel and from any inventory location.
In the context of multi-channel network design, Alptekinoğlu and Tang and Liu et al. conclude that expanding bricks-and-mortar
DCs for online distribution and fulfilling online orders from physical
stores pools inventory risks. Our research contributes to further
development in this direction by identifying which areas of OC
distribution are necessary to achieving excellence in fulfillment and
logistics. These key success factors from a retailer's point of view are
enhanced delivery modes together with shorter lead times and flexible
inventory allocation.
The literature mainly develops frameworks
for physical distribution quality in e-fulfillment. The critical elements for online purchases are availability,
delivery time, condition on arrival, return options and convenience, and
the perceived service quality of the logistics service providers. But specific elements for OC distribution are
discussed only marginally, if at all. Store integration, however, is
important within OC distribution, because an OC retailer's greatest
opportunity is to tie demand capture from all channels into in-store
fulfillment.
A further stream of
literature discusses the performance effects of adding an online channel
to existing bricks-and-mortar channels. For example, Neslin et al., Wolk and Skiera and Banerjee show that a
retailer's financial and strategic performance depends on an optimized
channel mix, channel design and level of channel independence, as well
as optimal resource allocation across channels. They identify the
positive effects of well-aligned channels. However, the analysis of the
concrete design of the distribution concepts remains on an aggregate
level.
The typologies developed in this paper serve as a
framework for investigating the criteria for OC distribution concepts.
Our qualitative analysis will help retailers to define their mix of OC
distribution types. We contribute to the literature by identifying the
advantages, challenges, and contextual factors for each of these
distribution types. The expert interviews showed that integrating
distribution concepts for distance and bricks-and-mortar channels can
result in the benefit of cross-channel synergies, from both an
operational and a service perspective. However, the objective was not to
show one correct solution for designing a successful distribution
strategy, because there is no single best practice valid for every
market situation. Rather, the aim was to provide a framework of concepts
that can be applied to build context-specific distribution models.
Thus, this paper discussed the advantages and challenges of each
concept, combining forward/backward sources and destinations.
Most
of the literature does not consider product characteristics for
distribution across multiple channels. However, customers have higher
expectations on fulfillment for specialty goods than for convenience
goods. Their satisfaction levels arising from delivery speed vary
accordingly. Therefore, industry-specific order fulfillment strategies
based on product characteristics should be implemented. We not only discussed these concepts in general for
non-food retailing, but also identified industry and product specifics
for OC distribution.
Moreover, we also extended the discussion of
distribution quality for return concepts. We find that return processes
and processing locations are highly dependent on structural conditions.
However, the only thing that matters is the quality of any reworking
and the speed of reintegration. Offering customers return options with
quick reimbursement on all channels improves customer service and is the
target scenario for OC retailers.
Conclusion and future areas of research
The
advent of channel-independent shopping behavior requires answers on how
to configure seamless forward and backward distribution for OC
retailing. The distribution concepts for OC retailing become manifold.
The distribution process is much more complex as retailers need to
orchestrate various dispatching locations and enable the shipment to
various destination points, whereas for a single-channel retailer the
physical flow of goods is more or less linear. Almost all retailers are
currently assessing new distribution options and pushing for a
convergence of distance retailing and outlet processing. However, retail
practice and current literature lack an empirically proven, integrated,
and systematic perspective on OC forward and backward distribution
structures. We carried out a comprehensive exploratory study to address
this gap. The study was based on expert interviews with 43 executives
from 28 main OC retailers with headquarters located in a German-speaking
country and five logistics service providers. This enables a broad
exploration of the concepts and their applications.
The main
results of our study can be summarized as follows: Expanding delivery
modes, increasing delivery speed and service levels are the key topics
for excellence in omni-channel forward and backward distribution.
Direct-to-customer shipments are mostly executed from a central retail
DC. Retailers gain economies of scale and inventory pooling effects when
this DC also supplies stores. Cutting-edge OC retailers offer in-store
pickup and in-store return options and can use their in-store inventory
also for customer pickup. The qualitative analyses of design concepts
will help managers to understand key causal relationships, contextual
factors, and to identify their context-specific development options. Our
typologies advance knowledge in retail distribution and guide research
towards crucial questions for further areas of study in model-based and
empirical approaches for OC retailing.
Our research is based on
interviews with main OC non-food retailers having their headquarters in
German-speaking countries. Thus, one of our core limitations is the
geographical scope of the investigation. Different market conditions
like higher online penetration, longer travel distances, or less
developed retail structures also influence the design requirements for
distribution. One example of country-specific characteristics is the
extent of home delivery. In Germany, home delivery is well-established
through the catalog business, while it is used less in other countries
like the US. Furthermore, as we focused on non-food,
we did not analyze grocery distribution, which is much more complex,
e.g., as it requires same-day home delivery with temperature-controlled
vehicles. Moreover, this paper did not assess who carries out the
operations. Choosing the service provider for the last mile is a crucial
decision for home deliveries. The question of profitability is not
answered with the distribution concepts developed above. Further
quantification of the various characteristic attributes is lacking and
should be provided in future studies.
Our empirical study can be
used for further research in various directions. First, for further
empirical research, the design options and typologies provided within
this study can serve as a basis for hypotheses on successful OC
distribution which could be tested using quantitative methods.
Quantitative indicators could also be derived, such as an OC integration
level or OC development stages. Additionally, the interrelations and
dependencies analyzed and discussed within this study can be tested in
separate surveys. Also the findings generated mainly from
German-speaking countries can be transferred to other markets. Our
findings are limited to non-food retailers. The findings can be further
tested with grocery retailers.
Second, a quantitative-based
stream can focus on modeling approaches to support forward and backward
distribution decisions of OC retailers. Our literature review shows that
models, which address the logistics planning problems of retailers with
multiple channels holistically taking into account implications for
traditional bricks-and-mortar and e-commerce business, are relatively
scarce. Our study can serve as a starting point for modeling the
different design options and their implications for solving the
potential trade-off of service and costs. Potential models might, e.g.,
analyze the optimal portfolio of delivery options or network structures.
Finally,
selected topics should be investigated in more depth either by case
studies or modeling approaches. Such topics can cover for example
questions of establishment and effectiveness of transshipments between
stores, cost-efficient selection of transportation modes for
cross-channel deliveries or cross-channel inventory allocation.
This
research will help retailers to build their distribution strategies in
the OC transformation process, while research can leverage the
typologies for further empirical and model-based research.