Profitability of online order fulfillment in multi-channel retailing |
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| Authors: | Rafay Ishfaq Naeem Bajwa |
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| Affiliation: | 1. Associate Professor, Harbert College of Business, Auburn University, 434 Lowder Hall, Auburn, AL 36849, USA;2. Assistant Professor, College of Business, University of Arkansas, 221 Reynold’s Business Building, Little Rock, AR 72204, USA |
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| 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. |
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| Keywords: | E-commerce Order fulfillment Multi-channel retail Profitability |
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