How to Win in an Omnichannel World

David R. Bell; Santiago  Gallino; Antonio  Moreno

Article | MIT Sloan Management Review | Fall 2014

How to Win in an Omnichannel World

by David R. Bell, Santiago Gallino and Antonio Moreno

Abstract

The omnichannel environment presents new challenges and opportunities for both information and product fulfillment. While all retailers need to effectively and efficiently manage fulfillment and information provision, there are important nuances to how this happens, depending on where and how the retailer got started and what kinds of improvement create the most leverage. This article delivers a customer-focused framework showing how to win in the omni-channel environment through critical innovations in information delivery and product fulfillment. The framework emerged from our research with both traditional and nontraditional retailers. To thrive in the new environment, retailers of all stripes and origins need to deploy information and fulfillment strategies that reduce friction in every phase of the buying process. This means simultaneously providing, in a cost-effective and narrative-enhancing way.

Keywords: Supply Chain Management; Customer Relationship Management; Marketing; Marketing Strategy; United States;

Format: Print

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Citation:

Bell, David R., Santiago Gallino, and Antonio Moreno. "How to Win in an Omnichannel World." MIT Sloan Management Review 56, no. 1 (Fall 2014): 45–53.

Spoilage, expiration, damage due to employee/customer handling, employee theft, and customer shoplifting usually are not reflected in inventory records. As a result, records often report phantom inventory, i.e., units of good not available for sale. We derive an optimal polynomial-time algorithm for the auditing and replenishment problem with phantom inventory, under the assumption that inventory is known immediately after replenishment. Moreover, we numerically show that a projected service-level threshold policy performs comparably to the optimal.

In 2010, amidst the growth of ecommerce and the emergence of new, purely online, fashion players, Zara launched its first online store, Zara.com. Since then, Zara’s online business had grown at a fast pace. By 2018, 12% of Inditex Group’s total sales came from the online channel. Since the inception of the first online store, Inditex leadership wanted its online and offline businesses to be integrated. However, the increase of online orders challenged some of its operations. Inditex was committed to the vision of becoming fully integrated, fully digital, and fully sustainable by 2020. How could stores continue to be relevant in a world with increasing presence of online touchpoints? What should the store portfolio look like in the medium term? How should Zara use and advance the integrated model going forward? What other challenges and opportunities would arise with the increase of online sales?

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How to Win in an Omnichannel World

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