Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies
This study develops a framework that structures the operational costs of online grocery retailing in order to identify which is the most suitable e-fulfillment strategy. The cost framework was designed by applying time-driven activity-based costing (TDABC) and is based on the insights of two large E...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Universitat Politecnica de Valencia
2023-06-01
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| Series: | International Journal of Production Management and Engineering |
| Subjects: | |
| Online Access: | https://polipapers.upv.es/index.php/IJPME/article/view/18442 |
| _version_ | 1797690759812481024 |
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| author | Miguel Rodríguez-García Angel Ortiz Bas José Carlos Prado-Prado Andrew Lyons |
| author_facet | Miguel Rodríguez-García Angel Ortiz Bas José Carlos Prado-Prado Andrew Lyons |
| author_sort | Miguel Rodríguez-García |
| collection | DOAJ |
| description | This study develops a framework that structures the operational costs of online grocery retailing in order to identify which is the most suitable e-fulfillment strategy. The cost framework was designed by applying time-driven activity-based costing (TDABC) and is based on the insights of two large European grocery retailers, which operate retail store and warehouse e-fulfillment strategies respectively. Cost information was collected, and activity-oriented process modeling was carried out in the field to identify the most relevant e-fulfillment cost drivers. For the retail store strategy, picking costs were the highest among e-fulfillment activities and up to twice as high as for the warehouse strategy. For the warehouse strategy, delivery costs were the highest and 50% higher than for the retail store strategy. Less studied logistics activities such as unpacking and reverse logistics all together accounted for up to one third of total expenses for both strategies. In omnichannel, operations and logistics managers must still ensure the profitability of the online channel if they want to succeed in the grocery business. This framework will help managers identify and estimate the most relevant cost drivers, and to allocate them to the main operational activities. |
| first_indexed | 2024-03-12T02:03:46Z |
| format | Article |
| id | doaj.art-f39dea5ec246486cb3fdd823224ba855 |
| institution | Directory Open Access Journal |
| issn | 2340-4876 |
| language | English |
| last_indexed | 2024-03-12T02:03:46Z |
| publishDate | 2023-06-01 |
| publisher | Universitat Politecnica de Valencia |
| record_format | Article |
| series | International Journal of Production Management and Engineering |
| spelling | doaj.art-f39dea5ec246486cb3fdd823224ba8552023-09-07T08:17:03ZengUniversitat Politecnica de ValenciaInternational Journal of Production Management and Engineering2340-48762023-06-0111212714510.4995/ijpme.2023.1844217632Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategiesMiguel Rodríguez-García0Angel Ortiz Bas1https://orcid.org/0000-0001-5690-0807José Carlos Prado-Prado2https://orcid.org/0000-0003-2189-2100Andrew Lyons3https://orcid.org/0000-0003-3105-1567Massachusetts Institute of TechnologyUniversitat Politècnica de València Universidade de VigoUniversity of LiverpoolThis study develops a framework that structures the operational costs of online grocery retailing in order to identify which is the most suitable e-fulfillment strategy. The cost framework was designed by applying time-driven activity-based costing (TDABC) and is based on the insights of two large European grocery retailers, which operate retail store and warehouse e-fulfillment strategies respectively. Cost information was collected, and activity-oriented process modeling was carried out in the field to identify the most relevant e-fulfillment cost drivers. For the retail store strategy, picking costs were the highest among e-fulfillment activities and up to twice as high as for the warehouse strategy. For the warehouse strategy, delivery costs were the highest and 50% higher than for the retail store strategy. Less studied logistics activities such as unpacking and reverse logistics all together accounted for up to one third of total expenses for both strategies. In omnichannel, operations and logistics managers must still ensure the profitability of the online channel if they want to succeed in the grocery business. This framework will help managers identify and estimate the most relevant cost drivers, and to allocate them to the main operational activities.https://polipapers.upv.es/index.php/IJPME/article/view/18442cost analysisonline fulfillmentfulfillment costsonline grocery retailingomnichannel retail |
| spellingShingle | Miguel Rodríguez-García Angel Ortiz Bas José Carlos Prado-Prado Andrew Lyons Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies International Journal of Production Management and Engineering cost analysis online fulfillment fulfillment costs online grocery retailing omnichannel retail |
| title | Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies |
| title_full | Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies |
| title_fullStr | Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies |
| title_full_unstemmed | Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies |
| title_short | Fulfillment costs in online grocery retailing: comparing retail store and warehouse strategies |
| title_sort | fulfillment costs in online grocery retailing comparing retail store and warehouse strategies |
| topic | cost analysis online fulfillment fulfillment costs online grocery retailing omnichannel retail |
| url | https://polipapers.upv.es/index.php/IJPME/article/view/18442 |
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