Assessing impacts of introducing ship-to-store service on sales and returns in omnichannel retailing: A data analytics study

Omnichannel retailing features, such as ship-to-store (STS) service, are designed to deliver a seamless shopping experience for customers. For a retailer, introducing omnichannel capabilities requires major investments to integrate physical stores and online marketplaces, yet holds a promise of potentially enhancing revenue streams from both brick-and-mortar (BM) stores and online store channels. We assess the promise of ship-to-store capabilities by analyzing transactional data from a national jewelry retailer to study impacts of introducing ship-to-store on a retailer's operating performance, in terms of sales and customer returns. Contrary to expectations, the findings show that online sales decreased after ship-to-store was introduced, although BM store sales increased. Detailed analysis of the transactional data suggests that, after STS implementation, some customers switched from the online channel to the brick-and-mortar channel. This switch occurred mainly for high-value purchases. The customers who actually remained with and fully completed a sale using the ship-to-store service typically were those that bought low-value items. Our findings also suggest that introducing ship-to-store increased cross-channel customer returns of online purchases to physical stores. Concurrently, these new ship-to-store returns generated additional BM store sales. The paper contributes by showing how introducing ship-to-store service can have different impacts in terms of sales and returns across a retailer's channels.