An exploration of the operations-marketing interface in the omni-channel context

  • Stuart Milligan

Student thesis: Doctoral ThesisPhD


Over the past twenty years, the retail industry has experienced a paradigm shift that has shaped the market significantly. In attempts to grow sales and gain market share, retailers have enhanced their proposition to make shopping more convenient. Defined as omni-channel retailing, retailers employ technology to integrate online and offline retail channels to offer customers a seamless shopping experience, where they can shop for whatever they want, wherever, and whenever they want to. As this strategy has become more widely adopted, retailers seek to differentiate themselves from competitors by offering ever-increasing ranges of goods at ever decreasing fulfilment times, with same day/ next day deliver firmly established as an industry standard. Whilst the adoption of an omni-channel strategy has proven successful for retailers from a marketing perspective, it has resulted in significant challenges from an operations perspective. The emerging narrative from an operations management perspective indicates that omni-channel fulfilment is associated with a proliferation of inventory, increased complexity, capacity challenges, and a marked increase in operating costs (compared to other configurations of retail fulfilment). In recognizing this problematic situation, the aim of this thesis is to address the question, how can retailers effectively align operations to meet the demands of omni-channel retail?

In line with the authors’ philosophical perspective of pragmatism, Dewey’s process of inquiry is employed as a template for research. The early stages of the process of inquiry are addressed through individual studies presented as unpublished research papers, the reasoning stage is addressed in the discussion chapter. To bring clarity to the indeterminate situation that exists at the operations-marketing interface in the omni-channel context, a systematic literature review is conducted to provide a state-of-the-art understanding of the field. Further clarity is provided using secondary practitioner sources to validate the propositions emerging from the literature review. The institution of a problem stage is addressed by adopting a structural contingency theory lens and using a proprietary data set from a leading UK omni-channel grocery retailer to explore the back-end fulfilment performance implications of adopting an omni-channel retailing strategy. Panel data analysis is used to quantify the magnitude of the deleterious back-end fulfilment performance resulting from omni-channel adoption and to explore how performance varies by fulfilment network mode. The determination of a problem solution stage is addressed by adopting a complex adaptive systems theory lens and conducting a qualitative study on the case organisation to understand the constituent elements of the problem. The reasoning stage is addressed in the discussion and conclusions chapter where two suggested solutions arising from the previous studies are explored.

The inquiry conducted in this thesis has yielded some important findings. First, omni-channel fulfilment will vary according by perishable, non-perishable, and online retailer types (named mode 1,2 and 3, respectively). Second, by focusing on mode 1 fulfilment (the mode typically adopted by UK grocery omni-channel retailers whereby existing bricks and mortar retailers have transitioned into omni-channel retail by adding online channels to the existing offline channels), the findings support the proposition that increased omni-channel retail activity results in decreased fulfilment performance. Additionally, fulfilment performance will vary by ambient and chilled distribution network modes. Finally, current configurations of omni-channel fulfilment are not sustainable from an economic or environmental perspective.

The primary limitation of this thesis is that it does not result in what Dewey refers to as a unified solution. This thesis progresses the problems observed at the operations-marketing interface in the omni-channel context from the indeterminate situation stage through to the reasoning stage of inquiry. To progress beyond this stage, the two suggestions presented in the discussion and conclusion chapter would need to be developed into experiments stage of inquiry, where mode 1 omni-channel retailers would be required to adopt the suggestions and observations made regarding the impact the suggestions had on both the operations and marketing functions of omni-channel retail. It is likely that the findings of these experiments do not immediately lead to a unified solution and further iterations of the process of inquiry are required. These latter stages are beyond the scope of this thesis.

This study reveals several important implications for practice. First, for mode 1 retailers’ online fulfilment is more expensive than offline fulfilment. As online sales continue to grow, this is likely to have an ongoing negative impact upon overall profitability for the retailers. Second, it will be far easier for mode 3 retailers to efficiently transition to omni-channel, rather than mode 1 retailers incorporating online fulfilment. Third, due to the inherent conflicts that exist between online and offline channels of fulfilment, it is unlikely that omni-channel fulfilment can ever be as efficient as single-channel fulfilment. Fourth, due to the increased fulfilment costs associated with omni-channel, mode 1 retailers are at a competitive disadvantage compared to bricks and mortar discount retailers as they are unlikely to ever be able to compete on price. Fifth, cutting-edge logistics technologies are effective at increasing inventory transparency and improving fulfilment planning. It is unlikely that these solutions will address the fulfilment channel conflicts that currently exists within mode 1 fulfilment configurations. This leads to the final implication, that as omni-channel activity continues to grow, new configurations of omni-channel fulfilment will be required for those bricks and mortar retailers who have transitioned to omni-channel retailers.

This study makes several important contributions to the scholarly literature concerned with omni-channel fulfilment. First, this study identifies and categorizes the different modes of fulfilment configurations that exist for omni-channel retailers. Second, building on the previous case studies that have been presented in the literature, this is the first study to demonstrate to a level of statistical significance that the adoption of an omni-channel marketing strategy has a negative impact upon fulfilment performance. Relatedly, it is the first study to quantify the magnitude of the impact that adopting an omni-channel strategy has upon fulfilment operations. Fourth, by identifying the constituent elements of the problem situation that exists within the operations-marketing interface in the omni-channel fulfilment context, two alternative configurations of mode 1 fulfilment have been suggested. Finally, the findings of this study have raised interesting questions around the application of structural contingency theory and complex adaptive systems theory in the omni-channel fulfilment context that warrants further inquiries.
Date of Award18 Jan 2023
Original languageEnglish
Awarding Institution
  • University of Bath
SupervisorBaris Yalabik (Supervisor) & Melih Celik (Supervisor)

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