Workshop’s Topic: Expansions in product assortment by online retailers often engender operational challenges. In undertaking such expansions, retailers exercise a strategic choice between expanding assortment width or depth. Our understanding of how this choice affects the order fulfillment process is limited. Employing an online retail data set comprising more than 200 million orders, we study the effects of assortment strategy on delivery timeliness using an instrumental variable approach. We then utilize a two-stage model to estimate the impact of delivery performance on sales. Finally, we employ a matched difference-in-differences and a novel Bayesian structural time-series model to confirm this relationship. We find that assortment width has a greater negative impact on order delivery timeliness compared with assortment depth. A one-standard-deviation increase in assortment width increases average delivery times by 0.55 days. Also, a one-day increase in delivery times for 10% of the orders results in a 2.7% reduction in future sales. Our findings suggest that online retailers focused on ensuring timely deliveries should be wary of widening product assortments, especially when facing larger average order sizes. We also find that experienced logistic service providers can help mitigate the dilatory effects of assortment width expansions. However, the benefits of experienced LSPs are limited for retailers deepening their assortments.

Time and Location: 10:30 AM (GMT+8), Room A523 (School of Management)

Language: English