Greening the route: Enhancing sustainability and efficiency in omnichannel retailing

Abstract

The rise of online commerce and omnichannel retailing has integrated various shopping channels, creating environmental challenges such as increasing carbon emissions. Retailers have adopted sustainability initiatives to address these issues, including greener transportation methods and optimization inventory management. This paper introduces a system dynamics model to optimize omnichannel retail operations, examining 64 scenarios across diverse operational environments. The model integrates sub-models focused on customer dynamics, operational efficiency, channel integration, and eco-financial impacts. Simulations reveal that replenishment frequency is key in affecting profitability and carbon emissions, with its impacts varying by geographic context and product characteristics. The findings demonstrate that frequent replenishment of small, high-value products enhances profitability and sustainability in urban areas. In contrast, in rural areas, it mainly reduces carbon emissions with limited effect on profitability. These results highlight the importance of tailoring strategies to specific operational contexts. This study contributes to academic knowledge by presenting a comprehensive framework integrating operational and environmental performance. It provides actionable insights for optimizing replenishment strategies and designing sustainable transportation systems. The model offers practical guidance for navigating the trade-offs between efficiency and sustainability, advancing research, and informing industry practice and policy development.