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Online versus bricks-and-mortar retailing: a comparison of price, assortment and delivery time

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  • Zhaolin (Erick) Li
  • Qiang Lu
  • Masoud Talebian

Abstract

The popularity of online retailing has created great opportunities and challenges for retailers. A key challenge faced by many retailers is the choice between the clicks, the bricks-and-mortar, and the bricks-and-clicks strategies. In this paper, we develop a comprehensive framework for selecting the appropriate distribution channel given assortment, logistics and consumer characteristics. Under the traditional bricks-and-mortar retail model, the retailer displays and sells the assortment in a physical store, whereas under the online retail model, the retailer accepts orders online and delivers the products offline. The traditional retailer jointly determines the breadth, the depth and the price of the assortment, whereas the online retailer jointly determines the breadth and price of the assortment and the delivery time. After deriving the joint optimal solution for the traditional and the online retailers, we compare their performance. We analytically and numerically examine how inventory cost, delivery cost and consumer behaviours could affect the optimal distribution strategy and customer service.

Suggested Citation

  • Zhaolin (Erick) Li & Qiang Lu & Masoud Talebian, 2015. "Online versus bricks-and-mortar retailing: a comparison of price, assortment and delivery time," International Journal of Production Research, Taylor & Francis Journals, vol. 53(13), pages 3823-3835, July.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:13:p:3823-3835
    DOI: 10.1080/00207543.2014.973074
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    Citations

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    Cited by:

    1. Stephen C. Wingreen & Natasha C. H. L. Mazey & Stephen L. Baglione & Gordon R. Storholm, 2019. "Transfer of electronic commerce trust between physical and virtual environments: experimental effects of structural assurance and situational normality," Electronic Commerce Research, Springer, vol. 19(2), pages 339-371, June.
    2. Subrata Mitra, 2022. "Economic models of price competition between traditional and online retailing under showrooming," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(1), pages 29-63, March.
    3. Sauvey, Christophe & Melo, Teresa & Correia, Isabel, 2019. "Two-phase heuristics for a multi-period capacitated facility location problem with service-differentiated customers," Technical Reports on Logistics of the Saarland Business School 16, Saarland University of Applied Sciences (htw saar), Saarland Business School.
    4. Juan Ramón López Soler & Panayotis Christidis & José Manuel Vassallo, 2021. "Teleworking and Online Shopping: Socio-Economic Factors Affecting Their Impact on Transport Demand," Sustainability, MDPI, vol. 13(13), pages 1-24, June.
    5. Li, Gang & Zhang, Tao & Tayi, Giri Kumar, 2020. "Inroad into omni-channel retailing: Physical showroom deployment of an online retailer," European Journal of Operational Research, Elsevier, vol. 283(2), pages 676-691.
    6. Ford, Weixing & Li, Yixiu & Zheng, Jie, 2021. "Numbers of bricks and clicks: Price competition between online and offline stores," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 420-440.
    7. Correia, Isabel & Melo, Teresa, 2019. "Dynamic facility location problem with modular capacity adjustments under uncertainty," Technical Reports on Logistics of the Saarland Business School 17, Saarland University of Applied Sciences (htw saar), Saarland Business School.
    8. Christopher Agbonifoh & Edith Odia, 2020. "Shoppers’ Perception Of Retail Convenience In Online Shopping In Benin City, Nigeria," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 5(1), pages 49-59, March.
    9. Yue Hao & Seung Uk Choi, 2019. "Operating Performance of Chinese Online Shopping Companies: An Analysis Using DuPont Components," Sustainability, MDPI, vol. 11(13), pages 1-13, June.
    10. Arslan, Ayşe N. & Klibi, Walid & Montreuil, Benoit, 2021. "Distribution network deployment for omnichannel retailing," European Journal of Operational Research, Elsevier, vol. 294(3), pages 1042-1058.

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