The Fourth Channel: Automatic Home Replenishment and its Implications for Supply Chain Cost and Customer Convenience

Management and Business Review, Forthcoming

31 Pages Posted: 22 Apr 2023 Last revised: 24 Feb 2024

See all articles by Stanley Frederick W. T. Lim

Stanley Frederick W. T. Lim

Michigan State University – The Eli Broad College of Business

David F. Pyke

School of Business Administration, University of San Diego

Date Written: October 27, 2022

Abstract

Consumers are shopping online for groceries in increasing numbers, a trend that was only magnified by the COVID-19 pandemic. At the same time, grocery retailers are experimenting with a variety of delivery models including where orders are fulfilled, the size and location of distribution centers, and whether the customer picks up her products or chooses delivery to her front door. Some retailers and manufacturers are further experimenting with the ordering process – supplementing online orders with subscription services and auto replenishment. Indeed, the Internet of Things (IoT) has connected consumers and their homes to retailers in a new reality where the shopping experience is being transformed. Here is a window of opportunity to create value and establish consumer loyalty, but the supply chain costs can be significant. Retailers should carefully analyze the details of the supply chain and last-mile delivery costs, as well as customer convenience factors. They may also want to consider an auto-replenishment concept called Market Basket Auto-Replenishment that could achieve many of the benefits customers are looking for without creating unsustainable costs to the supply chain.

Keywords: Automatic Home Replenishment, Ecommerce, Retail Operations, Supply Chain Management

JEL Classification: L81, D10, D20, D30

Suggested Citation

Lim, Stanley and Pyke, David F., The Fourth Channel: Automatic Home Replenishment and its Implications for Supply Chain Cost and Customer Convenience (October 27, 2022). Management and Business Review, Forthcoming , Available at SSRN: https://ssrn.com/abstract=4414170

Stanley Lim (Contact Author)

Michigan State University – The Eli Broad College of Business

Business College Complex 632 Bogue St
East Lansing, MI 48824
United States

David F. Pyke

School of Business Administration, University of San Diego ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States
619-260-4886 (Phone)

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