In particular the large stores in the DIY and consumer electronics sectors have the privilege of using this concept. (2008) consider return handling as part of distribution service design. The consumers of a product are scattered throughout the country. Finally, selected topics should be investigated in more depth either by case studies or modeling approaches. Trautrims etal. (2012), and Randall and Mello (2012) identify qualitative methods as a path to provide new insights into retail supply chains. Constructing mystery: empirical matters in theory development. Journal of Business Logistics 17(2): 93138. [5], Catalogs have long been used as a marketing device to drive phone and in-store sales. 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. However, they usually do not charge shipping fees on store pickup to increase store frequency. Retailers gain economies of scale and inventory pooling effects when this DC also supplies stores. Given this shift in consumer behavior, retailers and vertically integrated brands need to take a holistic view of the benefits of having a physical presence. In-store picking and packing also require dedicated space that cannot be used for the showroom. Its senior ecommerce and digital product manager, Melanie Edwards, says Were a DTC company that values the control we have over our brand, image, and product., However, the brand has also partnered with Shopify, Amazon, and brick-and-mortar retailers such as Target, Wegmans, and Whole Foods, etc. Regional DCs can be found in all sectors surveyed. Gioia. Many retailers who depended on catalog salesSears, Lands End, and J.C. Penney, to name a fewsuffered as online retailers and online sales from traditional retailers pulled convenience shoppers away from catalog sales. 7) and analyze the associated concepts. 2009. The Three Types of Distribution Channels. The authors summarize their discussions with eight French retail companies about these e-fulfillment types and economic performance as well as customer expectation indicators. Grant, A.C. McKinnon, and J. Fernie. 2008. Randall, W.S., and J.E. Rahman. Exploratory studies are appropriate to investigate the hows and whys of a little-known area (Brinberg and McGrath 1985; Stebbins 2001; Creswell 2003; Yin 2014), also for logistics topics (see e.g., Ellram 1996; DeHoratius and Rabinovich 2011). 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. The focus of this study is on principle concepts and typologies and not on operational problems for vehicle routing and shipment policies. In doing so, they decide which of a retailers existing bricks-and-mortar DCs should be extended to fulfill distance retail demand, thus making them OC operational. The atmosphere describes the feeling, tone, or mood of the store. International Journal of Physical Distribution and Logistics Management 40(5): 415432. 2004. 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 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) (Agatz etal., 2008). Lincoln, Y.S., and E.G. All of these descriptions fall into two categories. 2005). Hbner, A., Holzapfel, A. Who are these retailers? Unify your inventory management with Shopify. 2014. 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. ADVERTISEMENTS: H. Kotzab, S. Seuring, M. Mller, G. Reiner, 91106. This brand is much more established than you and sells lower-quality products at a cheaper price. A further stream of literature discusses the performance effects of adding an online channel to existing bricks-and-mortar channels. First, because the topic is relatively new and discussed in practitioner-oriented forums, we conducted an Internet search in this field. NRF. The owner, or franchisee, builds and manages the local business. Finally, we completed a qualitative content analysis (see 3.2) (Mayring 2011). Reverse logistics and closed-loop supply chain: a comprehensive review to explore the future. A few are extremely large, having sales of $500,000 or more on a single day. The share of online sales in retail is growing globally (Biggs and Suhren 2013; Forrester 2014). Table 1 summarizes these findings. Store assortments are smaller than the assortment offered online at around two-thirds of the OC retailers surveyed. 2013b). We further refer to Carter and Ellram (1998), Dekker etal. This is particularly essential for fashion retailers due to high return rates and relatively short seasonal periods. You build brand credibility by leveraging a distributors already well-established audience. Customers visiting those stores want the same world-class experience theyd have if they bought directly from you. This is why external RCs are used most often by fashion retailers with high return rates, because they can reduce their processing costs. 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 (EY 2015). Maintains a strong brand image by associating your products with distributors that reflect your brand values and reach your target market (versus being everywhere.). 1 Define retailing. 2013. Thomas, and P.C. 2013). Level 0 Distribution Channel. 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. However, picking costs are higher at the outlets than at the DC. Only the packing of a parcel is not required. Field research in operations and supply chain management: special issue on field research in operations and supply chain management. Beverly Hills: Sage Publications. 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). Are the fixtures decorative or merely functional? Given that the interviews relied on multiple informants from different companies, however, no informants interpretation dominated the study. Bernon, M., J. Upperton, M. Bastl, and J. Cullen. Such a strategy can be used for in-store buying, store pickup (click-and-collect) as well as for home delivery. They refer either to the atmosphere of the store or the layout of the store. Bhatnagar, A., and S.S. Syam. 2015. How is the backward distribution related to other OC logistics areas? Direct distribution gives companies more control over the whole process. 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. When an employee is helpful and efficient with the selection and/or purchase of a product, its an important and necessary aspect of the buyers retail experience. Kmrinen, V., J. Saranen, and J. Holmstrm. 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. Warehouse retailers streamline all operational aspects of their business and pass on the efficiency savings to customers. Return processes are likewise characterized by the sources (store, home) and destinations (store, DC, return center). Click-and-reserve ultimately results in better product availability as orders can be supplied from both inventories at the DC and at stores. This has resulted in inefficient supply chains and a lack of transparency across channels. Retail logistics in the transition from multi-channel to omni-channel. Towards a methodology for developing evidence-informed management knowledge by means of systematic review. Most often, the aim is to maintain a sense of exclusivitypeople can only get your products via a small selection of distribution channels. Almost all OC retailers are currently assessing new forward distribution options and pushing for a convergence of distance retailing and outlet processing. Beside the main distribution process in OC retailing, i.e., fulfilling customer orders, additional ancillary processes emerge. 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 (Brynjolfsson etal. Inventory control in multi-channel retail. It works for brands whose customers are happy to shop around. False, Agents and brokers are wholesaling intermediaries who take title and possession to goods and services they market. However, retail practice and current literature lack an empirically proven, integrated, and systematic perspective on OC forward and backward distribution structures. The retail distribution system was traditionally built as cost-efficient approach for delivering goods to stores (Hbner etal. A business can have multiple distribution channels, including wholesale and direct to consumers. 2010. 2013b), of which five participated. They identify a closer interaction between fulfillment for e-commerce and stores as a future area of research. . (2014) 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. 2011. 2. Retailers must also consider the particular shopping experience a buyer is seeking in that moment or context. However, it is important in a literature review to define distinct boundaries (Seuring etal. Thus, this paper discussed the advantages and challenges of each concept, combining forward/backward sources and destinations. 2014), because the OC concepts require integration of the bricks-and-mortar channel with the distance channel. The preferred processing location depends on a retailers structural conditions, e.g., available space at outlets and DCs. Retail also contributes $2.6 trillion to the U.S. gross domestic product.[1]. Biggs, C., and J. Suhren 2013. 2014; Gallino and Moreno 2014). Furthermore, the additional assortment available for pickup enhances the variety of products in the outlets. We not only discussed these concepts in general for non-food retailing, but also identified industry and product specifics for OC distribution. Mercier, P., D. Welch, and G. Crtenot. However, the advent of OC retailing has made the supply chain a consumer-facing frontend (Rabinovich and Bailey 2004; Rao etal. They remark on the scarcity of optimization models for return policies in e-fulfillment, especially in contrast to end-of-life returns. This diversity in size and earnings is reflected in the range of different ownership and management structures, discussed below. They see qualitative research as appropriate particularly to uncover so far unknown problems using a holistic approach. The importance of increasing delivery speed is based on the fact that most customers want to receive a delivery the day after placing the order, or two days later at most. It is mainly used when return handling processes become too work-intensive and DC capacities are scarce. Do you apply store pickup? Often, the franchise agreement includes well-defined guidance for the owner, training, and on-going support. 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. View the ABC inventory analysis report in Shopify admin to see your best and worst-performing inventory, optimize your purchasing, and increase profitability. Management Science 60(6): 14341451. True b. 2014; Bell etal. Challenges and options of distribution concepts were discussed from multiple perspectives. This additional service is highly relevant with respect to customer satisfaction and loyalty. Capacity planning and allocation with multi-channel distribution. The returns are then shipped either to (1) a retailers distance DC or (2) a specialized returns center (RC). Ellram, L.M. Rigby, D. 2011. International Journal of Research in Marketing 24(2): 129148. 2013. For instance, a product may go from the factory to a warehouse to the consumer. Roth. MIT Sloan Management Review 54(4): 2329. Pay less on last-mile delivery, speed up fulfillment times on local orders, and drive more foot traffic to your stores. Boyer, K.K., R. Hallowell, and A.V. Accessed 1 June 2016. 2002. (2002) identify the assessment of the different distribution design options as a future area of research. Teerling, J.S. 6.2.3). Some logistics managers argue that their bricks-and-mortar logistics system is simply not capable of additionally handling customer picking. 2009. The New York Times, January 25, 2015. A framework for reverse logistics. The produce section was once the entry point for every grocery store. Rabinovich etal. 2013; Beck and Rygl 2015). She teaches everything she knows through Peak Freelance. Second, there are home delivery (HD) concepts, and third, different store pickup (SP) concepts. 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. 2006). Journal of Retailing 91(2): 309325. Several retail distribution channels can be hard to manage. 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. International Journal of Physical Distribution and Logistics Management47(6/7). Within the e-fulfillment context, Swaminathan and Tayur (2003) 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. Journal of Retailing91(2):198216. The following video shares how one retail giant, Costco, understands the importance of treating its employees well in order to ensure good customer service and a positive shopping experience every time. The requirements for return processes are unequally complex within OC retailing. Exclusive Distribution: Exclusive distribution is when a business grants exclusive rights to a single retailer or distributor to carry a product. Disagreements, either between the researchers or between the researchers and the outside coders, were discussed until a consensus was achieved. McKinnon, A.C., and D. Tallam. A distribution channel is the way goods flow through the supply chain to the final customer. The companies interviewed have been active in OC retailingincluding operating an online shopfor between one and more than tenyears. Wolk, A., and B. Skiera. 2007. Journal of Service Research 9(2): 95113. (2005) 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. . The interface between retailers and logistics service providers in the online market. The retail marketing strategy includes all of the elements of the traditional marketing mix: In delivering the best retail experience through the right place, two additional Ps come into play: presentation and personnel. Only a few studies address the number and location of return centers where returned products are collected and reprocessed. A further option is processing returns in-store. Generally, retailers that have a significant B2B or wholesale business report these numbers separately in their financial statements, acknowledging that they are separate lines of business within the same company. Do you rely on integrated or separate (channel-specific) warehouse locations? Current actions are strategic decisions in this context. When Barnes & Noble adds Starbucks coffee shops to its locations, customers visit more frequently and stay longer, increasing the chance of additional purchases. A selective distribution strategy is what it says it is. Corley, K.G., and D.A. However, just one competitor sells to wholesalers. 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. 2005). Corbin, J.M., and A.L. Planning problems arise in connection with new delivery modes, particularly in terms of integrating the retail outlets into the delivery concept. 2011. Business research methods, 3rd ed. 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 integrated product returns model with logistics and marketing coordination. Formula + How to Calculate It (2023), What is Physical Inventory? Glaser, B. G., and A. L. Strauss. Still, the produce section continues to be the first food section that buyers are steered toward. Second, items may be misplaced by store customers and their current location in the store might not be detectable with affordable effort. Berlin Heidelberg: Springer. 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 NRF posts an annual list of the top one hundred retailers by retail sales. Examples of this type are the distribution of bulky goods in the DIY sector or white goods in consumer electronics. Return processes were investigated in a similar manner by distinguishing between source (stores, home) and destination locations (stores, DCs, RCs). 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. 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. The brand was created in partnership with Little Earth Productions and is already available on Amazon . 2013; Bell etal. 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. Retailers can sell directly to the end consumer and cut out the middlemen. This requires relatively homogeneous products with regard to their picking characteristics. As long as customers are willing to pay, they will impose shipping fees. 2013. International Journal of Retail and Distribution Management 41(7): 512530. Online retailers such as Overstock.com have aggregated products and offered them at deep discounts. Each of these retailing approaches can be customized to meet the needs of the target buyer or combined to span a range of needs. Accessed September 24, 2019. Capacitated location model with online demand pooling in a multi-channel supply chain. Items stored at a central DC are delivered directly to stores and customers. Verhoef. At the beginning of each interview, we asked the managers without prompting them, which areas in OC retailing are relevant achieving excellence in OC fulfillment and logistics. Liu, K., Y. Zhou, and Z. Zhang. Beck, N., and D. Rygl. End customers are conditioned to take home the products they buy in-store immediately. 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. There are, however, two other possibilities that are still not sufficiently developed, but may gain more importance in the future. Bell etal. Originally bricks-and-mortar retailers, furthermore, have a clear competitive advantage regarding store pickup as they have a widespread store network. We are deeply grateful to the 43 managers and executives from 33 companies who shared recent insights on retail distribution. We compile current concepts of distribution in OC retailing (Meredith 1993) and define basic terms (Seuring etal. 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. 2004. Section 5, therefore, answers RQ1 by identifying the major issues encountered when striving for excellence in logistics services and costs in OC distribution. Cutting-edge OC retailers offer in-store pickup and in-store return options and can use their in-store inventory also for customer pickup. OC outlets are showrooms and DCs at the same time. If at all, regional DCs are used only as transshipment points for such products. Section 4.2 then presents how we derived the results from the data collected. 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. Forecast demand, set low-stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more. International Journal of Production Economics 147: 573592. First, most channel structures end with a retailer. 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. Rabinovich, E., A.M. Knemeyer, and C.M. The NRF posts an annual list of the top one hundred retailers by retail sales. Often, as a shopper it is difficult to identify exactly what creates the atmosphere in a good shopping experience. http://de.statista.com/statistik/data/193167/ of 11/27/2013. Academy of Management Review 32(4): 12651281. 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. Another contribution, therefore, lies in deriving the qualitative benefits of the concepts. However, in this case, a longer lead time for reprocessing has to be taken into consideration. Thirumalai, S., and K.K. Lang, G., and G. Bressolles. The typologies developed in this paper serve as a framework for investigating the criteria for OC distribution concepts. Neslin etal. 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. 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. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. Journal of Operations Management 9(2): 250284. From choosing baby's name to helping a teenager choose a college, you'll make . 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. Non-food home delivery in Europe is usually fulfilled by carrier, express, and parcel providers (CEP), and without customers having to be at home (Fernie etal. Hbner, A., J. Wollenburg, and H. Kuhn. 3. Our main business is in brick-and-mortar retailing. An alternative is a drop shipment strategy (3), where customer orders are directly served from the suppliers. Supply Chain Forum 14(32): 1626. Nonetheless, despite tremendous growth in both nontraditional retail outlets and online sales, most retail sales still take place in brick-and-mortar stores. The type of product youre selling plays a major role in which distribution channels work best for your store. The different types (1)-(5) are depicted in Fig. 2013. For this reason, deliveries are rarely made from stores or suppliers. The qualitative analyses of design concepts will help managers to understand key causal relationships, contextual factors, and to identify their context-specific development options. The main goal of these interviews was to become familiar with the key change issues. J. Fernie, and L. Sparks, 205235. Moreover, we also extended the discussion of distribution quality for return concepts. 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. A prerequisite for this is an adequate IT system. 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 (Glaser and Strauss 1967) in the data, and invited further top 25 OC retailers from sector-specific rankings (i.e., the top 60 fashion retailers, top 5 in consumer electronics, and top 10 in DIY; see also LZ.net 2014 and Hbner etal. Inventory integration and allocation is mentioned as another critical issue by the interviewees. However, they do not discuss the specifics of retailing and home delivery. An owner purchases a franchise which gives her the right to use the firms business model and brand for a set period of time. Three of ten agreed to participate. 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. An effective content distribution strategy requires consistent content optimization. In Reverse logistics, ed. Supermarkets entire approach to the distribution of food and household cleaning and maintenance products is to offer large assortments these goods at each store at a minimal price. They are crucial for customer satisfaction, especially in the fashion sector, since it is difficult for customers to choose an ideal product online. A reviewers guide to the grounded theory methodology in logistics and supply chain management research. In this context, Xing etal. 1985. But strategies exist even for these sectors which support the operation of common DCs for both bricks-and-mortar and distance retailing. Reach millions of shoppers and boost sales, A commerce solution for growing digital brands, The composable stack for enterprise retail. (2008) analyze among other topics the distribution network design. Within their literature review, Agatz etal. In this section, we discuss our empirical findings in the context of the literature. Our findings are limited to non-food retailers. Optimizing your last mile delivery process helps achieve this with any distribution partner. Operations Management Research 8(3): 84100.
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