Omnichannel Fulfillment Dilemmas: Customer Preferences and Manager Perceptions

47 Pages Posted: 26 Jun 2019

See all articles by Santiago Gallino

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department

Antonio Moreno

Harvard University - Technology & Operations Management Unit

Robert P. Rooderkerk

Rotterdam School of Management, Erasmus University

Date Written: April 2019

Abstract

Problem Definition : Omnichannel retailers face hard choices when they decide how to improve the way they serve their customers. They use such levers as improving delivery and return policies, providing access to detailed product information and reviews, and offering lower prices. Because it is difficult for firms to excel on all dimensions simultaneously, it is crucial for them to have a profound understanding of the trade-offs consumers make when evaluating their offering.

Academic/Practical Relevance : If managers have biased perceptions of consumer trade-offs, these biases can represent serious obstacles to designing a winning operational strategy. We investigate the degree and nature of such managerial biases and propose a remedy for them.

Methodology : We use a state-of-the-art empirical approach to measure consumer prefer- ences for five dimensions of online channels, part of a larger omnichannel ecosystem (delivery policy, return policy, product information, branding, and pricing), and four product categories.

Results: We reveal that managers with experience in these categories have biased perceptions of what consumers prefer. Our analyses also show that it is very hard to identify experts with more accurate knowledge based on characteristics observable to the firm (e.g., experience, tenure, gender). Averaging predictions across individual managers show benefits from the so-called “wisdom of the crowd” and help to overcome individual biases.

Managerial Implications: Across the four categories, the crowd’s predictions outperform more than 96 percent of the individual managers’ predictions, resulting in more than 17 percent increased accuracy over the average manager. Our results also show that groups of as few as 5 to 10 managers already make a smart crowd, enhancing the feasibility of this strategy to overcome individual managerial biases in omnichannel retailing.

Keywords: omnichannel, marketing-operations interface, managerial biases, conjoint analysis

Suggested Citation

Gallino, Santiago and Moreno, Antonio and Rooderkerk, Robert P., Omnichannel Fulfillment Dilemmas: Customer Preferences and Manager Perceptions (April 2019). Available at SSRN: https://ssrn.com/abstract=3399664 or http://dx.doi.org/10.2139/ssrn.3399664

Santiago Gallino (Contact Author)

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States

Antonio Moreno

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=1029325

Robert P. Rooderkerk

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.rsm.nl/people/robert-rooderkerk/

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