Antonio (Toni) Moreno is the Sicupira Family Associate Professor in the Technology and Operations Management Unit. He teaches courses related to technology and operations management in the MBA, executive, and doctoral programs. Before joining HBS, he was an associate professor in the Kellogg School of Management.
Professor Moreno’s research studies the digital transformation of operations, and he is particularly interested in the transformation of retail and service industries. Professor Moreno’s work has appeared in journals such as Management Science, Marketing Science, Manufacturing & Service Operations Management, Information Systems Research, and Sloan Management Review, and has been covered by several media outlets. He received the Wickham Skinner Early-Career Research Accomplishments Award from the Production and Operations Management Society.
Professor Moreno earned degrees in electrical engineering and industrial engineering from Technical University of Catalonia. He has an MA in statistics and a PhD in operations and information management from the Wharton School of the University of Pennsylvania.
Featured Work
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Operations in an Omnichannel World
Springer Series in Supply Chain Management, C. Tang (Series Ed.), 2019.
The world of retailing has changed dramatically in the past decade. This edited book examines the challenges and opportunities arising from the shift towards omni- channel retail. We examine these issues through the lenses of operations management, emphasizing the supply chain transformations associated with fulfilling an omni-channel demand.
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Customer Supercharging in Experience-Centric Channels
We conjecture that for online retailers, experience-centric offline store formats do not simply expand market coverage, but rather, serve to significantly amplify future positive customer behaviors, both online and offline. We term this phenomenon “supercharging” and test our thesis using data from a digital-first men’s apparel retailer and a pioneer of the so-called zero inventory store (ZIS) format—a small-footprint, experience-centric retail location that carries no inventory for immediate fulfillment, but fulfills orders via e-commerce. Using a risk-set matching approach, we calibrate our estimates on customers who are “treated,” that is, have a ZIS experience, and matched with identical customers who shop online only. We find that after the ZIS experience, customers spend more, shop at a higher velocity, and are less likely to return items. The positive impact on returns is doubly virtuous as it is more pronounced for more tactile, higher-priced items, thus mitigating a key pain point of online retail. Furthermore, the ZIS shopping experience aids product discovery and brand attachment, causing sales to become more diffuse over a larger number of categories. Finally, we demonstrate that our results are robust to self-selection and potentially confounding effects of unobservable factors on the matched pairs of customers. Implications for retailing practice, including for legacy, offline-first retailers, are discussed.
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The Store Is Dead—Long Live the Store.
In this article, we pursue two interconnected themes: the expansion of online-first retailers into offline stores that serve the purpose of “supercharging” customer value, and the transformation of the stores of offline-first retailers from fulfillment-dominant centers into experience-dominant centers, which simultaneously reduce store size and inventory while improving the customer experience. In doing so, we explain how offline-first retailers can benefit from mimicking the showroom concepts started by online-first retailers and why online-first retailers can benefit from opening more traditional stores.
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Offline Showrooms in Omni-channel Retail: Demand and Operational Benefits
Omnichannel environments where customers shop online and offline at the same retailer are ubiquitous, and are deployed by online-first and traditional retailers alike. We focus on the relatively understudied domain of online-first retailers and the engagement of a key omnichannel tactic; specifically, introduction of showrooms (physical locations where customers can view and try products) in combination with online fulfillment that uses centralized inventory management. We ask whether, and if so, how, showrooms benefit the two most basic retail objectives: demand generation and operational efficiency. Using quasi-experimental data on showroom openings by WarbyParker.com, the leading and iconic online-first eyewear retailer, we find that showrooms: (1) increase demand overall and in the online channel as well; (2) generate operational spillovers to the other channels by attracting customers who, on average, have a higher cost-to-serve; (3) improve overall operational efficiency by increasing conversion in a sampling channel and by decreasing returns; and (4) amplify these demand and operational benefits in dealing with customers who have the most acute need for the firm’s products. Moreover, the effects we document strengthen with time as showrooms contribute not only to brand awareness but also to what we term channel awareness as well. We conclude by elaborating the underlying customer dynamics driving our findings and by offering implications for how online-first retailers might deploy omnichannel tactics.
Publications
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Book
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2019
Operations in an Omnichannel World
Santiago Gallino and Antonio Moreno
The world of retailing has changed dramatically in the past decade. Sales originating at online channels have been steadily increasing, and even for sales transacted at brick-and-mortar channels, a much larger fraction of sales is affected by online channels in different touch points during the customer journey. Shopper behavior and expectations have been evolving along with the growth of digital channels, challenging retailers to redesign their fulfillment and execution processes, to better serve their customers. This edited book examines the challenges and opportunities arising from the shift towards omnichannel retail. We examine these issues through the lenses of operations management, emphasizing the supply chain transformations associated with fulfilling an omnichannel demand. The book is divided into three parts. In the first part, “Omnichannel business models,” we present four studies that explore how retailers are adjusting their fundamental business models to the new omnichannel landscape. The second part, “Data-driven decisions in an omnichannel world,” includes five chapters that study the evolving data opportunities enabled by omnichannel retail and present specific examples of data-driven analyses. Finally, in the third part, “Case studies in omnichannel retailing,” we include four studies that provide a deep dive into how specific industries, companies, and markets are navigating the omnichannel world. Ultimately, this book introduces the reader to the fundamentals of operations in an omnichannel context and highlights the different innovative research ideas on the topic using a variety of methodologies.
Keywords: omnichannel;
omnichannel retail;
retail;
operations;
Operations;
Management;
Supply Chain Management;
Business Model;
Organizational Change and Adaptation;
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Article
| Production and Operations Management
Inventory Auditing and Replenishment Using Point-of-Sales Data
Achal Bassamboo, Antonio Moreno and Ioannis Stamatopoulos
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.
Keywords: shelf availability;
inventory record inaccuracy;
optimal replenishment;
retail analytics;
Performance Effectiveness;
Analysis;
Mathematical Methods;
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Article
| MIT Sloan Management Review
The Store Is Dead—Long Live the Store
David R. Bell, Santiago Gallino and Antonio Moreno
In this article, we pursue two interconnected themes: the expansion of online-first retailers into offline stores that serve the purpose of “supercharging” customer value, and the transformation of the stores of offline-first retailers from fulfillment-dominant centers into experience-dominant centers, which simultaneously reduce store size and inventory while improving the customer experience. In doing so, we explain how offline-first retailers can benefit from mimicking the showroom concepts started by online-first retailers and why online-first retailers can benefit from opening more traditional stores.
Keywords: customer experience;
Inventory control;
omnichannel retailing;
online marketing;
Marketing Channels;
Trends;
Transformation;
Retail Industry;
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Article
| Manufacturing & Service Operations Management
The Value of Fit Information in Online Retail: Evidence from a Randomized Field Experiment
Santiago Gallino and Antonio Moreno
Online channels generate frictions when selling products with nondigital attributes, such as apparel. Customers may be reluctant to purchase products they have not been able to try on, and those customers who do purchase may return products when they do not fit as expected. Virtual fitting-room technologies provide information about how a product fits a particular customer and promise to mitigate some of the frictions the information gap generates in the retailers’ supply chains. By implementing a series of randomized field experiments, we study the value of virtual fit information in online retail. In our experiments, customers are randomly assigned to a treatment condition where virtual fit information is available or to a control condition where virtual fit information is not available. Our results show that offering virtual fit information increases conversion rates and order value and reduces fulfillment costs arising from returns and home try-on behavior, that is, customers ordering multiple sizes of the same product. We explore mechanisms through which providing virtual fit information helps customers and retailers. We argue that the virtual fitting tool creates spillovers even to products that are not available for virtual try-on, increases loyalty, helps customers better parse their choice sets, and reduces uncertainty by providing size recommendation.
Keywords: supply chain information;
fit uncertainty;
online retail;
randomized field experiment;
virtual fitting room;
digital retail;
Customization and Personalization;
Online Technology;
Value;
Performance Improvement;
Apparel and Accessories Industry;
Retail Industry;
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Article
| Management Science
Offline Showrooms in Omni-channel Retail: Demand and Operational Benefits
David R. Bell, Santiago Gallino and Antonio Moreno
Omnichannel environments where customers shop online and offline at the same retailer are ubiquitous and are deployed by online-first and traditional retailers alike. We focus on the relatively understudied domain of online-first retailers and the engagement of a key omnichannel tactic; specifically, the introduction of showrooms (physical locations where customers can view and try products) in combination with online fulfillment that uses centralized inventory management. We ask whether, and if so, how, showrooms benefit the two most basic retail objectives: demand generation and operational efficiency. Using quasi-experimental data on showroom openings by WarbyParker.com, the leading and iconic online-first eyewear retailer, we find that showrooms (1) increase demand overall and in the online channel as well; (2) generate operational spillovers to the other channels by attracting customers who, on average, have a higher cost-to-serve; (3) improve overall operational efficiency by increasing conversion in a sampling channel and by decreasing returns; and (4) amplify these demand and operational benefits in dealing with customers who have the most acute need for the firm’s products. Moreover, the effects we document strengthen with time as showrooms contribute not only to brand awareness but also to what we term channel awareness as well. We conclude by elaborating the underlying customer dynamics driving our findings and by offering implications for how online-first retailers might deploy omnichannel tactics.
Keywords: experience attributes;
marketing–operations interface;
omnichannel retailing;
quasi-experimental methods;
Retail operations;
showrooms;
Marketing Channels;
Demand and Consumers;
Performance Efficiency;
Retail Industry;
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Article
| Management Science
Channel Integration, Sales Dispersion, and Inventory Management
Santiago Gallino, Antonio Moreno and Ioannis Stamatopoulos
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;
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Article
| Production and Operations Management
The Operational Value of Social Media Information
Ruomeng Cui, Santiago Gallino, Antonio Moreno and Dennis J. Zhang
While the value of using social media information has been established in multiple business contexts, the field of operations and supply chain management have not yet explored the possibilities it offers in improving firms' operational decisions. This study attempts to do that by empirically studying whether using publicly available social media information can improve the accuracy of daily sales forecasts. We collaborated with an online apparel retailer to assemble a dataset that combines (1) detailed internal operational information, including data on sales, advertising, and promotions, as well as (2) publicly available social media information obtained from Facebook. We implement a variety of machine learning methods to forecast daily sales. We find that using social media information results in statistically significant improvements in the out-of-sample accuracy of the forecasts, with relative improvements ranging from 12.85% to 23.23% over different forecast horizons. We also demonstrate that nonlinear boosting models with feature selection, such as random forests, perform significantly better than traditional linear models. The best-performing method (random forest) yields an out-of-sample mean absolute percentage error (MAPE) of 7.21% when not using social media information and 5.73% when using social media information is used. In both cases, this significantly improves the accuracy of the company's internal forecasts (a MAPE of 11.97%). Combining these empirical results, we provide recommendations for forecasting sales in general as well as with social media information.
Keywords: social media;
Machine learning;
Information;
Sales;
Forecasting and Prediction;
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Article
| Marketing Science
The Effects of Product Line Breadth: Evidence from the Automotive Industry
Antonio Moreno and Christian Terwiesch
Using a detailed data set from the U.S. automotive industry, we enrich the existing literature on product line breadth with new results that highlight previously unexplored operational aspects of its benefits and costs. We find that expanding product line breadth has a significant effect on increasing mismatch costs arising from the increased demand uncertainty associated with product proliferation. These mismatch costs are manifested through additional discounts and inventories. The effect of product line breadth on mismatch costs is comparable in magnitude to the effect on production costs, suggesting that the operational benefits of inventory pooling achievable by rationalizing product lines can be very substantial. Furthermore, we quantify the benefit of using a platform strategy to mitigate the effects of a broad product line on production costs. Finally, we propose an additional, attribute-based measure of product line breadth and find that product line breadth can work as a hedge against changes in demand conditions. For example, automakers that offer a broader range of fuel economy levels increase their market share and reduce their average discounts as gas prices become more volatile.
Keywords: variety;
pricing;
automotive industry;
marketing/operations interface;
platforms;
empirical operations management;
Product Marketing;
Production;
Management;
Market Platforms;
Auto Industry;
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Article
| Manufacturing & Service Operations Management
Pricing and Production Flexibility: An Empirical Analysis of the U.S. Automotive Industry
Antonio Moreno and Christian Terwiesch
We use a detailed data set from the U.S. auto industry spanning from 2002 to 2009 and a variety of econometric methods to characterize the relationship between the availability of production mix flexibility and firms’ use of responsive pricing. We find that production mix flexibility is associated with reductions in observed manufacturer discounts, resulting from the increased ability to match supply and demand. Under the observed market conditions, mix flexibility accounts for substantial average savings by reducing price discounting by approximately 10% of the average industry discount. We test three supplementary hypotheses and find that the reduction in discounts for vehicles manufactured at flexible plants is (1) higher for higher demand uncertainty, (2) higher for vehicles coproduced with vehicles that belong to a different segment, and (3) lower in situations with higher local competition.
Keywords: empirical operations management;
Flexibility;
pricing;
automotive industry;
Production;
Price;
Management;
Analysis;
Auto Industry;
United States;
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Article
| MIT Sloan Management Review
How to Win in an Omnichannel World
David R. Bell, Santiago Gallino and Antonio Moreno
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;
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Article
| Information Systems Research
Doing Business with Strangers: Reputation in Online Service Marketplaces
Antonio Moreno and Christian Terwiesch
Online service marketplaces allow service buyers to post their project requests and service providers to bid for them. To reduce the transactional risks, marketplaces typically track and publish previous seller performance. By analyzing a detailed transactional data set with more than 1,800,000 bids corresponding to 270,000 projects posted between 2001 and 2010 in a leading online intermediary for software development services, we empirically study the effects of the reputation system on market outcomes. We consider both a structured measure summarized in a numerical reputation score and an unstructured measure based on the verbal praise left by previous buyers, which we encode using text mining techniques. We find that buyers trade off reputation (both structured and unstructured) and price and are willing to accept higher bids posted by more reputable bidders. Sellers also respond to changes in their own reputation through three different channels. They increase their bids with their reputation score (price effect) but primarily use a superior reputation to increase their probability of being selected (volume effect) as opposed to increasing their bid prices. Negative shocks in seller reputation are associated to an increase in the probability of seller exit (exit effect), but this effect is moderated by the investment that the seller has made in the site. We conclude that participants in this market are very responsive to the numerical reputation score and also to the unstructured reputational information, which behaves in a similar way to the structured numerical reputation score but provides complementary information.
Keywords: online service marketplace;
procurement;
Auctions;
Reputation;
Bids and Bidding;
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Supplement
| HBS Case Collection
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June 2020
Vanguard Retail Operations (B)
Willy C. Shih and Antonio Moreno
The first two cases in this series are set in the financial services industry, and explore whether it is better for back-office workers to be generalists who provide the flexibility of being able to handle the complete range of transactions that the company faces or specialists who focus on a subset of the overall transaction mix. The objective is to introduce the advantages of demand pooling in reducing the variability associated with the forecasting of highly variable workloads, while also demonstrating the benefits to worker learning and efficiency improvements that can come from specialization.
The case is set at the Retail Investor Group Operations of the Vanguard Group, the mutual funds and ETF giant. Karin Risi, the managing director, is faced with a back-office operation that hasn’t kept up with massive transaction growth, one that is struggling under the weight of mounting client phone call and transaction volumes, client complaints, and buckling employee morale. And worse, the press was taking notice. The (A) case details the complexity in the growing backlog and frames the question of whether they should pursue a specialist model. The (B) case, for distribution in class, details the impact of an initial segmentation of workload into eight categories and poses additional questions for class discussion and analysis.
Keywords: pooling;
generalist model;
specialist model;
Service Operations;
Management;
Financial Services Industry;
United States;
Citation:
Shih, Willy C., and Antonio Moreno. "Vanguard Retail Operations (B)." Harvard Business School Supplement 620-105, June 2020.
View Details
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Case
| HBS Case Collection
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June 2020
Vanguard Retail Operations (A)
Willy C. Shih and Antonio Moreno
The first two cases in this series are set in the financial services industry, and explore whether it is better for back-office workers to be generalists who provide the flexibility of being able to handle the complete range of transactions that the company faces or specialists who focus on a subset of the overall transaction mix. The objective is to introduce the advantages of demand pooling in reducing the variability associated with the forecasting of highly variable workloads, while also demonstrating the benefits to worker learning and efficiency improvements that can come from specialization.
The case is set at the Retail Investor Group Operations of the Vanguard Group, the mutual funds and ETF giant. Karin Risi, the managing director, is faced with a back-office operation that hasn’t kept up with massive transaction growth, one that is struggling under the weight of mounting client phone call and transaction volumes, client complaints, and buckling employee morale. And worse, the press was taking notice. The (A) case details the complexity in the growing backlog and frames the question of whether they should pursue a specialist model. The (B) case, for distribution in class, details the impact of an initial segmentation of workload into eight categories and poses additional questions for class discussion and analysis.
Keywords: pooling;
generalist model;
specialist model;
Operations;
Service Operations;
Management;
Financial Services Industry;
United States;
Citation:
Shih, Willy C., and Antonio Moreno. "Vanguard Retail Operations (A)." Harvard Business School Case 620-104, June 2020.
View Details
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Case
| HBS Case Collection
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January 2020
Zara: An Integrated Store and Online Model (A)
Antonio Moreno
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?
Keywords: e-commerce;
stores;
Integration;
Operations;
Business Model;
Strategy;
Retail Industry;
Fashion Industry;
Europe;
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Research Summary
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Research Summary
Overview
by
Antonio Moreno
One major theme of Professor Moreno’s research has been retail channel integration and so-called “omnichannel retail.” In omnichannel retail, retailers provide their customers with a shopping experience that may involve different channels in a way that aims to be seamless. For example, many large retailers today allow customers to reserve products online and pick them up at the store where they are stocked, return products purchased online at physical stores, or buy products online and have them shipped to a store to pick up when convenient. In order to offer these functionalities, retailers need to integrate their channels. This is recognized currently by practitioners as one of the most important changes in retail, one that dramatically affects retailers’ operations – especially existing inventory models. Professor Moreno’s multidisciplinary work in this area – combining approaches from marketing, operations, and information systems – has helped bring such practically relevant issues to the attention of the operations management community.
In another stream of research, Professor Moreno has sought to understand the operational implications of novel features of (increasingly important) business models based on platforms, such as the fact that services often are provided by independent contractors who make decisions in response to available information and incentives, or the fact that many of these service providers are nonprofessionals. He has also empirically studied fundamental questions in operations strategy, such as how pricing and production flexibility interact. Finally, he has done work in the area of retail and supply chain analytics, developing models that can help firms make better decisions such as improving forecasts or inventory replenishment decisions.
Keywords: omnichannel;
omni-channel;
omnichannel retail;
omnichannel retailing;
retail;
Customer Value and Value Chain;
Information Management;
Technological Innovation;
Distribution;
Distribution Channels;
Logistics;
Product;
Product Design;
Service Delivery;
Supply Chain;
Supply Chain Management;
Information Technology;
Internet;
Online Technology;
Technology Adoption;
Technology Platform;
Retail Industry;
Technology Industry;
Service Industry;
Europe;
Spain;
Latin America;
Awards & Honors
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Finalist for the 2018 Ralph Gomory Best Industry Studies Paper Award from the Industry Studies Association with Santiago Gallino for their paper, "The Value of Fit Information in Online Retail: Evidence from a Randomized Field Experiment" (Manufacturing & Service Operations Management, Fall 2018).
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Recipient of the 2018 Management Science Meritorious Service Award.
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Winner of the 2017 Wickham Skinner Early-Career Research Accomplishments Award from the Production and Operations Management Society (POMS).
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Recipient of the 2017 Management Science Distinguished Service Award.
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Finalist for the 2017 Management Science Best Paper Award in Operations Management.
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Recipient of the Manufacturing & Service Operations Management (MSOM) Meritorious Service Award in 2015 and 2016.
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Recipient of the 2015 Management Science Meritorious Service Award.
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Winner of the 2014 Overall Best Paper Award from the Workshop on Information Systems and Economics (WISE) with David Bell and Santiago Gallino.
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Winner of the 2014 Production and Operations Management Society (POMS) Applied Research Challenge with David R. Bell and Santiago Gallino.
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