Profitability of online order fulfillment in multi-channel retailing

Rafay Ishfaq and Naeem Bajwa

European Journal of Operational Research, 2019, vol. 272, issue 3, 1028-1040

Abstract: Store-based retailers have been concerned about the high fulfillment costs and low gross margins of their online sales. This paper incorporates such issues in a non-linear mixed-integer profit maximization model of the online order fulfillment process for multi-channel retailers. A solution approach based on an iterative outer-approximation technique is developed. Using empirical data from a large U.S. retailer, the profitability of different options used by multi-channel retailers to fill online orders is evaluated. Managerial insights are developed through a factorial research design that highlights the effect of relevant logistics processes and fulfillment methods on the profitability of online sales for retailers.

Keywords: E-commerce; Order fulfillment; Multi-channel retail; Profitability (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:272:y:2019:i:3:p:1028-1040

DOI: 10.1016/j.ejor.2018.07.047

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