AN EMPIRICAL EXAMINATION OF NEW INNOVATIVE PROCESSES IN RETAIL

Retailers constantly innovate to improve their operations to maintain a competitive advantage, which has become even more apparent following the challenges from the COVID-19 pandemic. One challenge with innovating, however, is that limited information is available to evaluate the effectiveness of the operations. Fortunately empirical methodologies of structural estimation and field experimentation can be used to help determine if innovative processes at retail chains are fruitful when implemented. Field experiments provide direct causal evidence on whether the innovations will work while structural estimation allows for examining counterfactual scenarios to evaluate outcomes from such process innovations. In this dissertation, we leverage structural estimation and field experimentation to study three topics on the frontier of innovations in retail operations: a) dynamic pricing of product drops in the presence of resellers, b) localization of inventory for e-commerce retailers, and c) increasing customer recycling through operational incentives. The key results are as follows. In Chapter 2, through structural estimation we show that incorporating resellers into pricing improves retailer profit by 7% on average, and the impacts of the resale market to firm profit are heterogeneous across products based on the initial inventory relative to the initial demand. In Chapter 3, through structural estimation we find that distribution centers closer to the customer (front DCs) allow the e-commerce retailer to capture an average 10.7% benefit to profit by improving average promised delivery time by 28.3%. Front DCs allow to capture sales from high-margin SKUs with high demand where backup fulfillment results in much longer promised delivery time. In Chapter 4, through field experiments we find that the chosen value-based incentives and convenience-based incentives are ineffective at inducing customers to engage in recycling behavior, despite importance of these incentives toward recycling intentions reported in the literature. Our results suggest that offering programs to encourage e-waste recycling behavior can be a costly endeavor.Doctor of Philosoph