Online Grocery Retail: Revenue Models and Environmental Impact
| Autor: | Elena Belavina, Karan Girotra, Ashish Kabra |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Stylized fact
021103 operations research Distribution networks Strategy and Management 05 social sciences 0211 other engineering and technologies 02 engineering and technology Management Science and Operations Research Economies of scale Revenue model 0502 economics and business Sustainability Value (economics) Revenue 050211 marketing Environmental impact assessment Industrial organization |
| Zdroj: | Management Science. 63:1781-1799 |
| ISSN: | 1526-5501 0025-1909 |
| DOI: | 10.1287/mnsc.2016.2430 |
| Popis: | This paper compares the financial and environmental performance of two revenue models for the online retailing of groceries: the per-order model, where customers pay for each delivery, and the subscription model, where customers pay a set fee and receive free deliveries. We build a stylized model that incorporates (i) customers with ongoing uncertain grocery needs and who choose between shopping offline or online and (ii) an online retailer that makes deliveries through a proprietary distribution network. We find that subscription incentivizes smaller and more frequent grocery orders, which reduces food waste and creates more value for the customer; the result is higher retailer revenues, lower grocery costs, and potentially higher adoption rates. These advantages are countered by greater delivery-related travel and expenses, which are moderated by area geography and routing-related scale economies. Subscription also leads to lower food waste–related emissions but to higher delivery-related emissions. Ceteris paribus, the per-order model is preferable for higher-margin retailers with higher-consumption product assortments that are sold in sparsely populated markets spread over large, irregular areas with high delivery costs. Geographic and demographic data indicate that the subscription model is almost always environmentally preferable because lower food waste emissions dominate higher delivery emissions. This paper was accepted by Vishal Gaur, operations management. |
| Databáze: | OpenAIRE |
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