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Choice-Based Demand Management for Internet Retailers

Delivery vanIn a joint research project with Lancaster University, the University of Southampton and a major e-grocer in the UK, we looked at how to use choice modelling and optimisation techniques to incentivize customers of Internet Retailers to book delivery time slots that are most profitable. There may be various types of incentives, e.g. delivery charge, a delivery discount or non-monetary incentives such as Ocado's "Green Van" which represents environmental-friendly delivery slots.

We investigate the case where the Internet Retailer operate their own fleet of delivery vehicles, such as various e-grocers do. Maximising profits is a difficult problem in this situation since the final set of orders for a given delivery day are not known until shortly prior beforehand, yet decisions on pricing of delivery time slots have to be made in advance based on an estimate of how expensive it might be to serve a given order in a given time slot.

Our work was discussed in various media including ARNnet, businessGreen, CFO World, evigo, Internet Retailing, PC Advisor, Retail Systems, The Conversation.

Academics may be interested in the associated working paper (forthcoming in Transportation Science)

Yang, X., Strauss, A.K., Currie, C and Eglese, R:

Choice-Based Demand Management and Vehicle Routing in E-fulfilment.

(PDF Document) Download latest version of July 2013