The Impact of Omni-Channel Retail Operations on Customer Satisfaction: Evidence from U.S. Brick-and-Click Retailers

Abstract

This research examines how specific omni-channel retail practices affect customer satisfaction levels within U.S. brick-and-click retail businesses. In response to rapidly changing retail landscapes, an increasing number of traditional brick-and-mortar retailers have been combining online and offline shopping channels and systems with the goal of creating a “seamless” and convenient shopping experience. In this regard, the internal operational execution of the externally branded omni-channel strategies, plans, and promises may become an even more critical element of satisfying the increasingly sophisticated customer base. The current research uses a mixed-methods approach to analyze operationally related company data, consumer transaction records, and satisfaction survey data from a statistically valid sample of leading US retailers. It was found that major omni-channel attributes such as buy-online-pickup-in-store (BOPIS), real-time inventory transparency, and cross-channel returns have a significant and positive effect on customer satisfaction when properly implemented. However, this significant and positive effect is fully dependent on a few key performance measures such as channel-integrated backend operations as certain bare-minimum expectations and requirements (e.g., order fulfillment, speed, accuracy, and consistency of service across channels) must be met. In the event of an operation failure (omni-channel or not), the research also shows that consumer satisfaction can drop to below the channel-siloed baseline, as seen in some survey comments and a small subset of the data analysis. For these reasons, an “operational seamlessness paradox” is proposed, by which the omnichannel full-channel-integration proposition sets the bar for exceeding customer expectations and that is why operational perfection (zero defects) matters more in a satisfaction context. The study shows that for brick-and-click retailers, investing in the front-end experience for omni-channel shopping will require at least an equal level of superior backend operations integration to meaningfully leverage the channel synergy of increased efficiencies and customer value to produce a sustainable competitive advantage and increased customer loyalty. This research has practical implications for the field of retail operations management and is also original in its addition to the growing academic retail literature by empirically demonstrating connections between certain operational factors and related customer satisfaction measurements. The study also helped to highlight the importance of logistical service quality dimensions (e.g., timeliness and delivery reliability) for a variety of retail service offerings within different omni-channel contexts (e.g., buy-online-ship-from-store (BOSS) and buy-online-pickup-in-store (BOPIS)) as they are proven to have a direct, large, and positive effect on both customer satisfaction and loyalty.