New Research Grant for Prof. Ralf Seifert and Andrey Vasilyev

Abstract

Omnichannel commerce is a recent yet important phenomenon in retailing. Many customers demand a variety of purchasing and delivery options, and retailers in Switzerland and worldwide have to enable such omnichannel strategies by integrating their physical and online stores in order not to lose market share. Creating a seamless customer shopping experience is indeed of vital importance for retailers; especially in the presence of multinational companies like Amazon and Alibaba which have an enormous impact on the industry.

Implementing omnichannel strategies, however, is an extremely difficult task. One key issue is to estimate the effect of omnichannel strategies on the customer demand to optimize both product assortments and inventory quantities in turn. In our project, we use discrete choice modeling to address this challenge. This methodology allows to capture customers’ complex shopping behavior in an omnichannel environment. Choice modeling itself is a vast and thriving area, yet this research methodology is currently underutilized in the omnichannel literature.

Our primary aim is to develop quantitative methods to create a theoretical framework for modeling omnichannel demand which can be used for making optimal assortment decisions across a variety of retail channels. Our project will comprise three different phases. In the first phase, we will develop a basic mathematical model providing a foundation for future research on omnichannel choice modeling together with assortment optimization. In the second and third phases we will increase the modeling power of our framework by relaxing a number of simplifying assumptions and carry out an extensive numerical study to gain managerial insights.