Demand Management Opportunities in E-fulfillment: What Internet Retailers Can Learn from Revenue Management

In this paper, we explain how Internet retailers can learn from proven revenue management concepts and use them to reduce costs and enhance service. We focus on attended deliveries as these provide the greatest opportunities and challenges. The key driver is service differentiation. Revenue management has shown that companies can do much better than a one-size-fits-all first-come-first-serve strategy when selling scarce capacity to a heterogeneous market. Internet retailers have strong levers at their disposal for actively steering demand, notably the offered delivery time windows and their associated prices. Unlike traditional revenue management, these demand management decisions affect both revenues and costs. This calls for a closer coordination of marketing and operations than current common practice.ketenbeheer;revenue management;home delivery;E-fulfillment;demand management;marketing-operations interface

E-logistics of agribusiness organisations

Logistics is one of the most important agribusiness functions due to the idiosyncrasy of food products and the structure of food supply chain. Companies in the food sector typically operate with poor production forecasting, inefficient inventory management, lack of coordination with supply partners. Further, markets are characterised by stern competition, increasing consumer demands and stringent regulation for food quality and safety. Large agribusiness corporations have already turned to e-logistics solutions as a means to sustain competitive advantage and meet consumer demands. There are four types of e-logistics applications: (a) Vertical alliances where supply partners forge long-term strategic alliances based on electronic sharing of critical logistics information such as sales forecasts and inventory volume. Vertical alliances often apply supply chain management (SCM) which is concerned with the relationship between a company and its suppliers and customers. The prime characteristic of SCM is interorganizational coordination: agribusiness companies working jointly with their customers and suppliers to integrate activities along the supply chain to effectively supply food products to customers. E-logistics solutions engender the systematic integration among supply partners by allowing more efficient and automatic information flow. (b) e-tailing, in which retailers give consumers the ability to order food such as groceries from home electronically i.e. using the Internet and the subsequent delivery of those ordered goods at home. (c) Efficient Foodservice Response (EFR), which is a strategy designed to enable foodservice industry to achieve profitable growth by looking at ways to save money for each level of the supply chain by eliminating inefficient practices. EFR provides solutions to common logistics problems, such as transactional inefficiency, inefficient plant scheduling, out-of-stocks, and expedited transportation. (d) Contracting, a means of coordinating procurement of food, beverages and their associated supplies. Many markets and supply chains in agriculture are buyer-driven where the buyers in the market tend to set prices and terms of trade. Those terms can include the use of electronic means of communication to support automatic replenishment of goods, management of supply and inventory. The results of the current applications of e-logistics in food sector are encouraging for Greek agribusiness. Companies need to become aware of and evaluate the value-added by those applications which are a sustainable competitive advantage, optimisation of supply chain flows, and meeting consumer demands and food safety regulations. E-business diffusion has shown that typically first-movers gain a significant competitive advantage and the rest companies either eventually adopt the new systems or see a significant decline in their trading partners and perish. E-logistics solutions typically require huge investments in hardware and software and skilled personnel, which is an overt barrier for most Greek companies. Large companies typically are first-movers but small and medium enterprises (SMEs) need institutional support in order to become aware that e-logistics systems can be fruitful for them as well

(R)evolution of the E-grocery Industry: Strategic Implications

The use of the Internet in grocery retailing created the need for new business models, but it did not bring radical changes to consumer behaviour. Despite adopting revolutionary business models in their early days, online grocery firms did not manage to survive or reach profitability without using existing supermarket infrastructure and knowledge. Today, with most online grocers supplying small market niches, it is important to understand the reasons that made online grocers adopt a hybrid click and mortar strategy. Historical evidence from online grocery in the UK and the US suggests that firms had to adopt contingent strategies to face the difficulty of attracting consumers, sectorial entry barriers and financial targets.e-grocery, contingency, mismatch, revolution and evolution

The changing market for distribution: implications for Exel Logistics

This paper has been written to compliment a previous Working Paper (The Evolution of a Distribution Brand: The Case of Exel Logistics) and to some extent allows that company’s development (1989- 1993) to be placed in the context of marketplace and industry changes. I wish to examine three of the main trends affecting the distribution industry over the same period. Firstly, the move towards the centralisation of operations by both manufacturers and retailers, secondly at the debate surrounding contracting-out and in-house distribution activities and finally, the issues under consideration must be seen in a wider context - that of distribution and the Single European Market (SEM), which could be said to be the most important development facing the distribution industry for many years. These trends will be discussed in some detail and, where appropriate, from Exel Logistics’ perspective in order to consider how far the company has gone both in dealing with marketplace changes and in achieving its aims.School of Managemen

From bricks-and-mortar to bricks-and-clicks: logistics networks in omni-channel grocery retailing

Purpose: The advent of grocery sales through online channels necessitates that bricks-and-mortar retailers redefine their logistics networks if they want to compete online. Because the general understanding of such bricks-and-clicks logistics systems for grocery is still limited, the purpose of this paper is to analyze the internal logistics networks used to serve customers across channels by means of an exploratory study with retailers from different contexts. Design/methodology/approach: A total of twelve case companies from six European countries participated in this exploratory study. Face-to-face interviews with managers were the primary source for data collection. The heterogeneity of our sample enabled us to build a common understanding of logistics networks in grocery retailing on multiple channels and to understand the advantages of different warehousing, picking, internal transportation and last-mile delivery systems. Findings: Bricks-and-mortar grocery retailers are leveraging their existing logistics structures to fulfill online orders. Logistics networks are mostly determined by the question of where to split case packs into customer units. In non-food logistics channel integration is mostly seen as beneficial, but in grocery retailing this depends heavily on product, market and retailer specifics. The data from our heterogeneous sample reveals six distinct types for cross-channel order fulfillment. Practical implications: Our qualitative analysis of different design options can serve as decision support for retailers developing logistics networks to serve customers across channels. Originality/value: The paper shows the internal and external factors that drive the decisionmaking for omni-channel logistics networks for previously store-based grocery retailers. Thereby it makes a step towards building a contingency and configuration theory of retail networks design. It discusses in particular the differences between grocery and non-food omni-channel retailing, lastmile delivery systems and market characteristics in the decision-making of retail networks design

New trends on urban goods movement: Modelling and simulation of e-commerce distribution

In this paper, a modelling framework to complete the recent scientific works on urban goods modelling is proposed. More precisely, we introduce a substitution procedure that estimates the number of trips and the corresponding travelled distances for shopping drive, home delivery and reception points' strategies. Moreover, an appraisal of scenarios is proposed in order to study how these three new forms of proximity delivery services impact on the overall urban goods movement distribution. Starting from four extreme situations, we introduce more realistic scenarios in order to find a suitable combination of delivery strategies. All the scenarios are simulated using the proposed framework, and the main traffic issues related to e-commerce distribution channel are discussed. The best realistic combination promotes the joint usage of home deliveries and proximity reception points and allows a reduction of about 13% of the road occupancy rates in urban areas.urban goods movement, modelling, shopping trips, e-commerce

An assessment of the sustainability of E-fulfilment models for the delivery of fast moving consumer goods to the home

Online retail sales are growing rapidly and have captured a significant proportion of the retail market in many countries. Although companies are under mounting pressure to reduce their environmental impact, the environmental effect of the different online distribution strategies remains unclear. Most previous studies of this subject have only included partial effects and consequences. To enable a more holistic understanding, this study proposes a more inclusive framework of environmental assessment based on life cycle analysis. This was applied to fast moving consumer goods (FMCG). Previous studies have shown that the last mile delivery contributes significantly to the environmental impact of online retailing, mainly because of the nature of the home delivery operations, including narrow time windows and short order lead times. If consumers were to buy products online on a subscription basis and give the supplier more control over the replenishment process there might be less need for fast deliveries, creating opportunities to improve the efficiency of home deliveries and reduce their environmental impact. The study classified different forms of subscription arrangement, assessed their relative attractiveness to consumers and examined their likely impact on the supply chain. Consumer views on subscriptions were surveyed by means of focus group discussions and interviews. To assess the likely supply chain impacts of subscriptions, the literature on vendor-managed inventory was consulted. A Life-Cycle Assessment (LCA) model was built to quantify and compare the environmental impact of various e-fulfilment models for FMCG products in the United Kingdom. This study reveals that the method of execution have a large influence on the environmental impact. In store-based retailing, the energy consumption within the supermarket is a significant contributor to the total greenhouse gas emissions. On the other hand, some forms of home delivery, involving for example the use of parcel networks with no pre-agreed time-slots and relatively high rates of delivery failure and customer collection, are also carbon-intensive. This contribution of consumer trips to the total footprint is much smaller in case of van-based deliveries where pre-agreed time-windows are used. Regardless of the business model, the total carbon footprint per item depends heavily on the number of items per delivery. Consequently, companies or consumers looking to decrease the environmental impact of online shopping should maximise the number of items per delivery. The study concludes with an assessment of the strengths, weaknesses and possible environmental improvements of each of the efulfilment methods, taking account of the possible role of subscriptions

Delivery pattern planning in retailing with transport and warehouse workload balancing

Goods from warehouses must be scheduled in advance, prepared, routed, and delivered to shops. At least three systems directly interact within such a process: warehouse workforce scheduling, delivery scheduling, and routing system. Ideally, the whole problem with the preceding inventory management (restocking) would be solved in one optimization pass. In order to make the problem simpler, we first decompose the total problem by isolating the delivery scheduling. Then we connect the optimization model to the rest of the system by workload balancing goal that is a surrogate of coordination and criterion for the system robustness. This paper presents the practical application of top-down discrete optimization that streamlines operations and enables better reactivity to changes in circumstances. We search for repetitive weekly delivery patterns that balance the daily warehouse and transportation utilization in the absence of capacity constraints. Delivery patterns are optimized for the quality criteria regarding specific store-warehouse pair types, with a special focus on fresh food delivery that aims at reducing inventory write-offs due to aging. The previous setup included semimanual scheduling based on templates, historical prototypes, and domain knowledge. We have found that the system augmented with the new automated delivery scheduling system brings an improvement of 3% in the performance measure as well as speed in adjusting to the changes, such was the case with changes in policies during COVID-19 lockdowns

Collaboration in urban distribution of online grocery orders

Purpose: Population growth, urbanisation and the increased use of online shopping are some of the key challenges affecting the traditional logistics model. The purpose of this paper is to focus on the distribution of grocery products ordered online and the subsequent home delivery and click and collect services offered by online retailers to fulfil these orders. These services are unsustainable due to increased operational costs, carbon emissions, traffic and noise. The main objective of the research is to propose sustainable logistics models to reduce economic, environmental and social costs whilst maintaining service levels. Design/methodology/approach: The authors have a mixed methodology based on simulation and mathematical modelling to evaluate the proposed shared logistics model using: primary data from a major UK retailer, secondary data from online retailers and primary data from a consumer survey on preferences for receiving groceries purchased online. Integration of these three data sets serves as input to vehicle routing models that reveal the benefits from collaboration by solving individual distribution problems of two retailers first, followed by the joint distribution problem under single decision maker assumption. Findings: The benefits from collaboration could be more than 10 per cent in the distance travelled and 16 per cent in the time required to deliver the orders when two online grocery retailers collaborate in distribution activities. Originality/value: The collaborative model developed for the online grocery market incentivises retailers to switch from current unsustainable logistics models to the proposed collaborative models

E-grocery challenges and remedies: Global market leaders perspective

The purpose of the study is to identify logistic elements germane to e-grocery businesses, and to reveal the challenges collateral with each logistic element. Further, it strives to create a better understanding of specific remedies that have been employed by top e-grocery retailers to overcome existing challenges while aligning identified challenges with Turban’s framework. Extensive semi-structured interviews were conducted with management staff in three of the top ten global online grocery retailers and another that was a market leader in a European country. The qualitative data collected was transcribed and coded using a non-hierarchical axial coding to identify emerging themes in content analysis. The results expose a range of challenges that could be compartmentalised into three broad categories, in harmony with the different stages of the order fulfilment process. Interestingly, the study found that most challenges were operational rather than tactical or strategic in nature. While the study expands existing knowledge, its revelation that most challenges lie in the management of roles and responsibilities domain is instructive. This makes it imperative for practitioners to focus on this specific area if meaningful improvement in e-grocery retailing performance is to be realised. This research offers a systematic understanding of supply and distribution challenges, including remedies utilised to ameliorate the effect of the challenges from the perspectives of the top companies in the industry. These remedies can be invaluable for existing and emerging e-grocers