Abstract
The location selection problem of buy online and pick up in store (BOPS) is becoming one of the major decision-making issues for omni-channel retailers. This study intends to suggest methods for optimizing the locations of BOPS pickup stores.
In the first method we evaluate the suitability of existing offline stores as BOPS pickup facilities and selects stores with good scores. For retailers who are new to omni-channel, there is a need to determine which of the existing offline stores will be used as an BOPS facility. The types of BOPS facilities should also be decided depending on the location, size, and operations of stores. In this study we first derived the evaluation factors and rated the relative importance of each factor with Fuzzy-AHP in order to quantitatively evaluate the fitness of stores for BOPS and ranked the fitness.
The second method is to find the optimal location for a pickup store with high BOPS demand and good customers accessibility. For retailers who want to provide BOPS in a new area where their stores do not exist, they have to choose the optimal location of BOPS facilities. In this method, population centroids weighted by residential type were used as demand points to estimate demand volumes, and network distance that customers visit a store to use BOPS service was calculated using the geographical information system (GIS) location models.
In the third method, we try to find an optimal combination of pickup stores that minimizes the total cost of BOPS. Omni-channel retailers, running different types of pickup stores, want to operate their logistics network with minimal costs. We build a mathematical model by including the goodwill that customers feel when BOPS is provided and the upselling that occurs at pickup stores in the model.
To demonstrate their practical applications, these models were applied to a real problem in a Korean city of Suwon. Finally, we compared pros and cons of the above mentioned three methods(Fuzzy-AHP, GIS and mathematical model). The results confirmed that the proposed models are helpful for solving real problems with the placement of BOPS facilities. The models developed in this study can contribute to location allocation of BOPS facilities and logistics network optimization in omni-channel supply chain management.
Key words : omni-channel, buy online pickup in store, location, omni-channel scm, fuzzy-AHP, GIS, mathematical model