1. 1 CONFIDENTIAL Consumer Logistics: “movement and handling of goods and people that is performed by consumers to facilitate consumption.” Granzin (1990)

2. 2 CONFIDENTIAL The Downstream Supply Chain M W R C M = manufacturerR = retailer W = wholesalerC = consumer

3. 3 CONFIDENTIAL Consumer (Logistics) Behavior Need Recognition Transportation Shopping/Search Exchange Transportation & Storage Production/Consumption

4. 4 CONFIDENTIAL Consumer Behavior--Two Views

5. 5 CONFIDENTIAL Time & Money Where does the money go? (Kelley 1958) commodity costs convenience costs Where does the time go? (Downs 1961) travel time shopping time checkout time

6. 6 CONFIDENTIAL Crowell & Bowers (1977) TC = price + transportation + time Add cost of time to the equation and consumers visit fewer stores.

7. 7 CONFIDENTIAL “Prisoner of Time,” Ms., Oct. 1988 “during her or his lifetime, the average American squanders five months waiting for traffic lights to change, eight months opening unsolicited mail, a year looking for misplaced objects, two years in futile attempts to return phone calls, four years doing basic housework, and five years waiting in line--a total of 13 years gone up in smoke.” Pogrebin (1988)

8. 8 CONFIDENTIAL The Alberta Phone Survey Random-digit dialing 10 call backs CATI: computer-assisted telephone interviews 30-minute confidential interview Urban vs. Rural Topic: grocery shopping R = 67.1%

9. 9 CONFIDENTIAL Shopping List? YES ------- 66% NO -------- 34%

10. 10 CONFIDENTIAL Transportation Mode CAR --------- 91% FOOT --------- 7%

11. 11 CONFIDENTIAL Stockout Response Stockout of item x at Store A Go to Store B Buy item y Backorder (defer purchase)

12. 12 CONFIDENTIAL Response to Stock-out of Item x at Store A Item x at Store B ------- 47% Item y at Store A ------- 15% Defer purchase ---------- 32%

13. 13 CONFIDENTIAL Time and Availability Average Travel Time = 13.8 minutes Average Shopping Time = 41.2 minutes Average Checkout Time = 12.5 minutes Average Stock-out = 1.4 items

14. 14 CONFIDENTIAL Predictors of Consumer Satisfaction Stock Availability ------------- YES Check-out Time --------------- YES Shopping Time ----------------- NO Travel Time --------------------- NO

15. 15 CONFIDENTIAL How to: Please the Consumer reduce product prices save consumers time (Bender 1964) give TLC! Tender Loving Care Total Logistics Costs

16. 16 CONFIDENTIAL TC = pQ + c(I - A) + a(2D) + wT p = purchase price Q = quantity purchased c = compromise cost I = ideal item; A = actual item a = cost of travel ($/mile) D = distance to store w = cost of time ($/hour) T = time (travel + shopping + checkout)

17. 17 CONFIDENTIAL TC = pQ + c(I - A) + a(2D) + wT p = purchase price Q = quantity purchased FOB origin vs. destination Sales tax Q = f{family size; vehicle capacity; location (urban vs. rural); p}

18. 18 CONFIDENTIAL TC = pQ + c(I - A) + a(2D) + wT c = compromise cost I = ideal item; A = actual item stock-outs? consumer risk perceptions reverse logistics implications

19. 19 CONFIDENTIAL TC = pQ + c(I - A) + a(2D) + wT a = cost of travel ($/mile) D = distance to store consumer perceptions of travel costs retail (car, gas) vs. e-tail (computer, AOL) reverse logistics implications

20. 20 CONFIDENTIAL TC = pQ + c(I - A) + a(2D) + wT w = cost of time ($/hour) T = time (travel + shopping + checkout) consumer perceptions of time retail vs. e-tail retailer impacts checkout, but not travel

21. 21 CONFIDENTIAL “Home online mantra is ‘logistics’” “If the key to real-world retailing is location, location, location, then for e-commerce it’s logistics, logistics, logistics.” Carroll (2000)

22. 22 CONFIDENTIAL “E-Commerce Success.. Order Fulfillment Chaos” “Companies are figuring out how to sell goods over the Internet, but getting the goods to the customer is another story. As online orders from consumers and businesses soar past the 2 billion per year mark, Net sellers will be faced with logistics chaos.” Anonymous (1999)

23. 23 CONFIDENTIAL B2C e-commerce Markets National markets Local markets XXX Hour delivery markets Copacino (2000)

24. 24 CONFIDENTIAL Aspinwall’s (1958) Types of Goods

25. 25 CONFIDENTIAL Caltagirone (2000) “the online grocery business will explode”

26. 26 CONFIDENTIAL Murphy (2000) Online Grocery Sales 1998$ 350,000,000 2002$3,500,000,000

27. 27 CONFIDENTIAL e.g. e-grocers Peapod.comIN BUSINESS Webvan.comBANKRUPT Groceryworks.com BOUGHT BY SAFEWAY

28. 28 CONFIDENTIAL Peapod.com Top-quality products Competitive prices Convenience First-rate customer service

29. 29 CONFIDENTIAL Webvan.com Selection Quality Value Convenience

30. 30 CONFIDENTIAL B2C Logistics Options Consumer pick-up (drive through) Home delivery Drop-off/pick-up (mini-storage) Office delivery

31. 31 CONFIDENTIAL Consumer pick-up (drive through) home warehouse

32. 32 CONFIDENTIAL Home delivery home warehouse

33. 33 CONFIDENTIAL Drop-off/pick-up (mini-storage) home warehouse mini