The Environmental Impact of the Advent of Online Grocery Retailing

49 Pages Posted: 3 Apr 2019

See all articles by Ekaterina Astashkina

Ekaterina Astashkina

INSEAD

Elena Belavina

Cornell SC Johnson College of Business

Simone Marinesi

The Wharton School, University of Pennsylvania

Date Written: March 10, 2019

Abstract

This study assesses the environmental impact of the advent of online grocery retailing. We model the grocery supply chain before and after the emergence of online grocery retail. The models include suppliers, offline and online retailers, the delivery infrastructure, and households. All firms and households optimally manage their inventory; online retailers also optimally manage deliveries. We compare food waste and transportation emissions before and after the advent of online grocery retail. We isolate three key factors that drive the difference: (i) which households switch to online shopping, (ii) their shopping patterns, and (iii) how the first two factors change where inventories are held. In general, moderate online grocery prices and delivery fees lead to (desirable) adoption primarily by households located “far” from offline stores, neither too frequent shopping nor too large basket sizes by these online households, and enough beneficial inventory centralization—and a consequent reduction in emissions. Numerical calibration using industry and demographic data reveals that in most US cities the advent of online grocery should be beneficial, leading to an eventual 8-41% reduction in emissions; more congested, wealthier, lower offline-store-density cities have the most substantial gains. Finally, making online deliveries from existing offline stores further enhances environmental benefits.

Keywords: Online Retailing, Food Waste, Grocery Delivery, Sustainable Operations

JEL Classification: Q51, Q55, Q56, Q58, R40, D10, D30, L81, L91

Suggested Citation

Astashkina, Ekaterina and Belavina, Elena and Marinesi, Simone, The Environmental Impact of the Advent of Online Grocery Retailing (March 10, 2019). Available at SSRN: https://ssrn.com/abstract=3358664 or http://dx.doi.org/10.2139/ssrn.3358664

Ekaterina Astashkina

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Elena Belavina

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Simone Marinesi (Contact Author)

The Wharton School, University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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