Distribution systems in omni-channel retailing

Abstract

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. Building an effective and efficient omni-channel (OC) distribution system, however, leads to multiple challenges. The questions arise for example, from where online orders should be fulfilled, how delivery and return processes can be organized, and which context-specific OC distribution systems exist. 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. This overall picture is still missing in the literature. We conducted an exploratory study to close this observable gap in the literature. This exploratory study is based on semi-structured interviews with major OC retailers in German-speaking countries and was complemented by market data research and discussions with further experts in the field of OC retailing. Based on the results of the study, the forward distribution system in OC retailing is characterized by the sources (supplier DCs, retailer DCs, stores) and destinations (home, store) which describe the options for store delivery, home delivery, and store pickup. Return processes are likewise characterized by the sources (store, home) and destinations (store, DC, return center). 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 present paper, therefore, contributes to the literature in three main areas: (1) it identifies and systematizes the forward and backward concepts in OC retailing, (2) it reveals application and development areas for achieving excellence in OC fulfillment and logistics, and (3) shows the need for developing sector- and context-specific OC distribution systems.