ABSTRACT:
In this study, we develop insights on three key aspects related to omni-channel assortment: product popularity, demand fulfillment level, and channel primacy. Regarding product popularity, we probe whether conventional wisdom of selling popular products through the physical channel and niche products through the online channel is always optimal. Our results show that this suggestion may be sub-optimal when the price in the online channel is greater or customers are heterogeneous in their preference for channel. For demand fulfillment level, we examine whether popular products should always have greater demand fulfillment level. We find that the fulfillment level depends on the cost structure of the channel through which the product is sold and not on demand volume. Finally, we develop insights on when it is optimal to sell most or all of the products through one of the channels and explore how this is affected by changes in model parameters.
Key words and phrases: Omni-channel retail, joint assortment, long-tail strategy, demand fulfillment level, online retail, online-offline