Working Papers

Saman Modiri, Scott Fay, Not So Fast! How Delivery Time Impacts a Multi-Channel Retailer’s Profit.

Working Paper

Employing a stylized analytical model, we study how the delivery time for online orders affects the profitability of a multi-channel retailer that operates both an online channel and physical stores. In this paper, we ask whether faster delivery always increases a retailer's profit. Interestingly, we find that it can be profitable for a retailer to delay delivery even if faster delivery were costless and logistically feasible. In particular, a “Delayed Delivery” strategy is optimal when (a) consumers’ travel costs to the physical store are small, (b) consumers differ substantially in their valuations for the product, and (c) high-value consumers experience greater disutility from shopping online than do low-value consumers. Furthermore, we find that delaying delivery can induce a retailer to serve more consumers, introduce an online channel (when there otherwise would be only physical stores), and/or fully segment the market. Counterintuitively, we show that Delayed Delivery can create a win-win scenario in which both the firm and consumers benefit from online orders being delivered less promptly. Lastly, delaying delivery can be as profitable as offering a menu of shipping options in which a premium is charged for faster delivery.  

Saman Modiri, Liangbin Yang, Amiya Basu, A Multi-Metric Approach to TV Advertising Effectiveness.

Working Paper

The literature suggests heterogeneity in the short-term and long-term responses to advertisement campaigns. However, previous research has often been at the aggregate level and fails to capture individual-level heterogeneity. In addition, while advertisers benefit from capturing the effects of their advertising across multiple metrics, such studies are often scattered and independent of each other. Lastly, the advertising environment has become increasingly complex, with consumers repeatedly exposed to different campaigns. This paper analyzes this advertising environment by exploring the attribution of advertising campaigns to consumers' short-term and long-term behavior across multiple key identifying metrics. Using a novel empirical framework, we find significant heterogeneity across different response metrics as well as variation between short-term and long-term responses. We document that while advertisements might increase aggregate demand, these results disappear when accounting for market heterogeneity. Furthermore, we document heterogeneous ad effects on customer retention likelihood and loyalty across different consumer cohorts. Our results can benefit firms by enabling them to make more informed decisions and improve their advertising performance. Furthermore, our model provides a robust framework for generating insights from available real-time data to improve decision-making.

Work In Progress

Saman Modiri, Scott Fay, Should You Charge a Delivery Fee? The Optimal Bundle of Delivery Time and Delivery Fee for Profit Maximization

Saman Modiri, Rong Li, The Value of Incentivized Webrooming and Showrooming on Revenue, Channel Structure, and Inventory Management for an Omnichannel Retailer

Webrooming and showrooming, the practice of using one channel to examine a product and the alternative to purchase, has been and is still a significant phenomenon in the retail industry. The literature also investigates this practice from different perspectives with varying results in its implications and profitability for the retailer. On the other hand, retailers have attempted to optimize their inventory management with practices including ship-to-store, ship-from-store, pick-up-at-store, and so forth. Combining these two phenomena, we study the conditions under which it is optimal from an inventory and revenue management perspective to incentivize customers to use one channel only to examine a product and the other to purchase. 

We develop a stylized analytical model with heterogeneous consumers in their valuations, channel preference, and intertemporal sensitivity and utilize this model to analyze three channel strategies: the cases where the physical or online channel is used purely for product examination and the case where a hybrid of the two exists. We find that under different market conditions, heterogeneous strategies emerge where the retailer benefits from incentivizing webrooming or showrooming. Additionally, we find scenarios where the firm practices a hybrid of the two strategies, incentivizing one practice to one market segment while offering the alternative to the other. These results contribute to the literature by setting up a framework where managers can find the optimal strategy where inventory and revenue concerns are considered simultaneously.