Collaboration in urban distribution of online grocery orders

Abstract

Purpose Population growth, urbanisation and the increased use of online shopping are some of the key challenges affecting the traditional logistics model. The purpose of this paper is to focus on the distribution of grocery products ordered online and the subsequent home delivery and click and collect services offered by online retailers to fulfil these orders. These services are unsustainable due to increased operational costs, carbon emissions, traffic and noise. The main objective of the research is to propose sustainable logistics models to reduce economic, environmental and social costs whilst maintaining service levels. Design/methodology/approach The authors have a mixed methodology based on simulation and mathematical modelling to evaluate the proposed shared logistics model using: primary data from a major UK retailer, secondary data from online retailers and primary data from a consumer survey on preferences for receiving groceries purchased online. Integration of these three data sets serves as input to vehicle routing models that reveal the benefits from collaboration by solving individual distribution problems of two retailers first, followed by the joint distribution problem under single decision maker assumption. Findings The benefits from collaboration could be more than 10 per cent in the distance travelled and 16 per cent in the time required to deliver the orders when two online grocery retailers collaborate in distribution activities. Originality/value The collaborative model developed for the online grocery market incentivises retailers to switch from current unsustainable logistics models to the proposed collaborative models.