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Optimizing an Omnichannel Retail Strategy Considering Customer Segmentation.

Shuangpeng Yang1, Li Zhang2

  • 1Faculty of Management and Economics, Kunming University of Science and Technology, Kunming, China.

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Summary

This study introduces a robust two-stage approach for omnichannel retailers to optimize inventory and fulfillment using ship-from-store strategies. The method improves efficiency and profitability by dynamically managing distribution and store selection.

Keywords:
customer segmentationomnichannelrobust optimizationship-from-store

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Area of Science:

  • Operations Research
  • Supply Chain Management
  • Retail Logistics

Background:

  • Traditional logistics models often overlook dynamic consumer distribution and its impact on inventory management.
  • Omnichannel retailers face complex decisions regarding inventory replenishment, allocation, and order fulfillment.

Purpose of the Study:

  • To develop an optimization model for omnichannel retailers integrating the ship-from-store strategy.
  • To improve inventory balance and store selection based on consumer distribution patterns.
  • To enhance fulfillment efficiency within multiperiod sales plans.

Main Methods:

  • A multiperiod stochastic optimization model solved using a robust two-stage approach (RTA).
  • K-means algorithm and silhouette coefficients for optimal store number determination (Stage 1).
  • Linear decision rules (LDR) for replenishment, allocation, and fulfillment decisions (Stage 2).

Main Results:

  • The RTA demonstrated efficiency gaps below 10% compared to existing methods, even under unmet assumptions.
  • Sensitivity analysis confirmed that ship-from-store strategies consistently increase profits despite variations in key business parameters.
  • The model effectively balances inventory and optimizes store selection for enhanced fulfillment.

Conclusions:

  • The proposed RTA is a highly effective method for omnichannel retail optimization.
  • Integrating ship-from-store strategies significantly boosts profitability and operational efficiency.
  • The model provides a robust framework for dynamic inventory and fulfillment management in complex retail environments.