Quick response and omnichannel retail operations with the ship‐to‐store program

• Published date: 01 November 2020
• Author: Daojian Yang,Xiujie Zhang
• Date: 01 November 2020
• DOI: http://doi.org/10.1111/itor.12781

Intl. Trans. in Op. Res. 27 (2020) 3007–3030

DOI: 10.1111/itor.12781

INTERNATIONAL

TRANSACTIONS

IN OPERATIONAL

RESEARCH

Quick response and omnichannel retail operations

with the ship-to-store program

Daojian Yangaand Xiujie Zhangb,∗

aCollege of Management and Economics, Tianjin University, Tianjin, 300072, China

bZhonghuan Information College Tianjin University of Technology, Tianjin, 300380, China

E-mail: yangdaojian@tju.edu.cn [Yang]; zhang893@126.com [Zhang]

Received 20 February2019; received in revised form 1 November 2019; accepted 2 February 2020

Abstract

Tobetter integrate online businesses with offline stores, fast-fashion retailersroll out the “ship-to-store” (STS)

initiative, which is an omnichannel fulfillment method that allows consumers to order online and have their

parcels delivered to selected stores for pickup. To study the impact of STS on fast-fashion operations, we

consider four scenarios: multichannelretailing, multichannel retailing with quick response (QR), omnichannel

retailing with STS, and omnichannel retailing with both STS and QR. Moreover, we investigate how STS

influences the value of QR. The results show that although STS benefits firms in many situations, STS under

a QR strategy can reduce a retailer’s profits when inventory information disclosure due to STS dampens

cross-selling opportunities. Our findings also reveal that the implementation of STS may lower the value of

QR when customers who encounter stockouts offline opt to purchase online directly rather than use STS.

Keywords:omnichannel operations; quick response; ship to store; strategic consumer behavior; newsvendor model

1. Introduction

Fast-fashion retailersare endeavoring to implement omnichannel strategies to better meet consumer

demand. As a canonical example, Zara, a fast-fashion behemoth, is seeking to integrate its online

businesses seamlessly with brick-and-mortar stores, to maintain its leading role in the apparel

industry (Babcock, 2017; Kowsmann, 2017). In China, Zara ships products to local outlets, if

consumers choose store delivery when shopping online. Moreover, these shoppers can check real-

time inventory informationon desired items in a physical store (Zara, 2018a, 2018b). H&M, another

apparel giant, is also exploring channel integration programs. H&M’s online customers can select

a “pickup in store” option to have their parcels shipped to chosen shops in the United Kingdom

∗Corresponding author.

C

2020 The Authors.

International Transactionsin Operational Research C

2020 International Federation ofOperational Research Societies

Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St, Malden, MA02148,

USA.

3008 D. Yangand X. Zhang / Intl. Trans. in Op. Res. 27 (2020) 3007–3030

Tabl e 1

Similarities and distinctions between STS and BOPS

Distinctions

Omnichannel fulfillment

method Similarities

Conditions for

application Shipment of parcels

STS rConsumers place orders

online and collect parcels

from an offline store.

rProducts are out of

stock in the physical

store.

rProducts are in stock

in the online channel.

rParcels of online orders are

shipped from the online

platform to a selected offline

store.

BOPS rConsumers place orders

online and collect parcels

from an offline store.

rProducts are in stock

in the offline store.

rThere is no shipment, since

products are already in st ock

in the offline store.

(H&M, 2018). This omnichannel initiative is usually referred to as “ship to store” (STS) (Forrester,

2014).

STS is an omnichannel fulfillment method designed to allow consumers to place orders online

and havetheir parcels shipped to a selected offline store for pickup (Gallino et al., 2017). STS differs

from “buy-online, pick-up-in-store” (BOPS), which is a fulfillment method that enables customers

to submit online orders for products already available in the physical store and then collect parcels

by visiting the store in person (Gao and Su, 2017). The similarities and distinctions between STS

and BOPS are shown in Table 1. The BOPS option is viable only when the desired product is in

stock in a local shop; by contrast, STS is feasible when the offline store is out of stock. STS parcels

are normally shipped from an online platform to an outlet chosen by a customer. A 2017 UPS study

on online shoppers reveals that 50% of respondents have used STS options; furthermore, of these

consumers, 41% intend to utilize STS more frequently in the following year (UPS, 2017).

While embracing omnichannel operations, fast-fashion retailers are also reaping the benefits of

quick response (QR), which has long been adopted by leading apparelfir ms such as Zara and H&M

(Drake and Marley, 2010). QR is an operational strategy that capitalizes on a set of information

technologies and expedited logistics operations, and aims to shorten lead time and enhance supply

flexibility (Cachon and Swinney, 2009; Choi and Sethi, 2010). QR can be implemented by a firm

with either traditional single-channel retailing or multichannel retailing. By contrast, omnichannel

retailing operations (like STS) can work only in a multichannel system, as they are carried out

across channels.

Nevertheless, there are connections between QR and omnichannel operations. In general, they

interact in two ways. First, they work in combination to affect consumers’ shopping choices. QR

influences customers’ expectations of product availability in a store, thus changing consumers’

selections between buying online and purchasing through the offline channel. The introduction of

omnichannel operations also has an impact on customers’ shopping options. For instance, STS

provides shoppers with a new shopping path. In the presence of both STS and QR, a retailer’s

inventory policy influences shoppers’ evaluation of the three shopping channels.

C

2020 The Authors.

International Transactionsin Operational Research C

2020 International Federation ofOperational Research Societies