Theme：Omnichannelization and Last-Mile Delivery in a Grocery Retail Chain

Lecturer：Yuelin Shen, Shanghai Maritime University

Time：2022.05.12 9:00

Site：Tecent meeting 900-809-975

  Abstract：

  Hema Fresh, a grocery chain owned by Alibaba, implements an omnichannel system with their online and offline stores. All the customers in the system have to register with a wireless applet to process transactions. The product prices in the two channels are the same, and delivery for online orders is free. We study the roles of omnichannelization, which converts offline-only customers into omnichannel customers, and product digitization in achieving management's goal of driving customers from offline to online and the choice between insourcing and outsourcing delivery capacity. We define low-digitization and high-digitization products by formulating a relation between the hassle cost and product digitization. We construct one traditional and one new channel system to demonstrate when and why the grocery chain's omnichannel system is effective. In the traditional system, we have, by construction, one group of offline-only customers and one group of omnichannel customers, and the prices in the two channels can differ. The new system omnichannelizes offline-only customers in group one and imposes a uniform price across the two channels. We find that for low-digitization products, the new system outperforms the traditional system only if there are sufficient offline-only customers in the total customer pool and product digitization is high enough; for high-digitization products in the new system, the retailer uses either the online or the offline channel. Improving product digitization increases the ratio of online sales to total sales and favors delivery insourcing over delivery outsourcing. This paper suggests that omnichannel retailers can expand their online markets through omnichannelization and product digitization. Delivery capacity should be insourced when product digitization is high and the capacity cost is below a certain threshold.

This is a joint work with Yuting Chen.

  Introduction to the lecturer：