MIT Sloan Management Review, September 16, 2014
Introduction: Paula Cuneo, a teacher in Ashland, Massachusetts, ordered 10 pairs of corduroy pants in a range of sizes and colors from Gap Inc.’s website, and later returned seven of them, according to a 2013 Wall Street Journal article. Ms. Cuneo is, perhaps unwittingly, an exemplar of a key challenge in today’s omnichannel retail environment — an environment where customers shop through a variety of online and offline channels. The challenge omnichannel retailers face is this: How can retailers provide consumers with information (about what products best suit them) without incurring downside on product fulfillment (delivery of products)?
The omnichannel environment presents new challenges and opportunities for both information and product fulfillment. This is equally true for “traditional” retailers like the Gap, which began business with physical stores, and “new” retailers like New York-based eyeglasses brand Warby Parker, which started out by selling online. While all retailers need to effectively and efficiently manage fulfillment and information provision, there are important nuances to how this happens — depending on where and how the retailer got started and what kinds of improvement create the most leverage.