Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • Article
  • Management Science

Channel Integration, Sales Dispersion, and Inventory Management

By: Santiago Gallino, Antonio Moreno and Ioannis Stamatopoulos
  • Format:Print
ShareBar

Abstract

We study the effects of the introduction of cross-channel functionalities on the overall sales dispersion of retailers and the implications of these effects for inventory management. To do that, we analyze data from a leading U.S. retailer who introduced a “ship-to-store” (STS) functionality that allows customers to ship products to their local store free of charge when those products are not available in their local store. Based on the fact that stores prioritize carrying products for which local demand is high, we test the hypothesis that introducing the STS functionality increased the retailer’s overall sales dispersion. We find that, on average, the contribution of the 90% lowest-selling products to total sales increased by 0.75 percentage points, increasing sales dispersion. Calibrating conventional inventory-ordering models, we show that to respond optimally to the observed increase in dispersion, the retailer would need to increase its cycle and safety inventories by approximately 2.7%. Our paper points out the effect of an increasingly important retail phenomenon (channel integration) on a key factor for inventory management (sales dispersion).

Keywords

Retail Operations; Online Retail; Channel Integration; Sales Dispersion; Long Tail; Empirical Operations; Inventory Management; Omnichannel Retail; Marketing Channels; Integration; Sales; Logistics; Operations; Management; Retail Industry

Citation

Gallino, Santiago, Antonio Moreno, and Ioannis Stamatopoulos. "Channel Integration, Sales Dispersion, and Inventory Management." Management Science 63, no. 9 (September 2017): 2813–2831.
  • Find it at Harvard
  • Purchase

About The Author

Antonio Moreno

Technology and Operations Management
→More Publications

More from the Authors

    • June 2022
    • Faculty Research

    Zalando: Becoming the Starting Point for Fashion

    By: Antonio Moreno, Leela Nageswaran, Emilie Billaud and Federica Gabrieli
    • June 2022
    • Faculty Research

    Worten Portugal: Becoming a Digital Marketplace

    By: Antonio Moreno, Pedro Amorim and Tonia Labruyere
    • October 2021 (Revised October 2021)
    • Faculty Research

    Operations in an Omnichannel World

    By: Antonio Moreno
More from the Authors
  • Zalando: Becoming the Starting Point for Fashion By: Antonio Moreno, Leela Nageswaran, Emilie Billaud and Federica Gabrieli
  • Worten Portugal: Becoming a Digital Marketplace By: Antonio Moreno, Pedro Amorim and Tonia Labruyere
  • Operations in an Omnichannel World By: Antonio Moreno
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College