Efficient allocation of online grocery orders

Abstract

Despite some initial setbacks, the online grocery business is viable and growing. In this paper, we discuss the industry's value proposition, its business models, the various quality issues faced by an e-grocer and the trade-offs faced in the selection of a highly efficient fulfilment strategy. Brick and click grocers usually choose fulfilment from stores rather than distribution centres. However, store fulfilment is vulnerable to congestion and 'trolley rage' when pickers of online orders get in the way of traditional shoppers. We propose a management science model for efficient allocation of online grocery orders. The model shows the impact of delivery budget and overall utilisation on store congestion. Contrary to current practice, which typically allocates orders to the nearest store, our model shows the optimal solution. Practitioners can use the model to prevent customer dissatisfaction while researchers will find this study provides a basis for future model extensions and fine-tuning.

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