BUS602: Marketing Management

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.