The Effect of Fulfillment Issues on Customer Behavior: An Empirical Analysis of an Online Grocery Retailer

Operations and Information Management Department; Faculty Advisor: Marshall Fisher

We seek to answer the questions of how order fulfillment errors and consumer characteristics shape consumer behavior. To do so we are studying item order level data from a U.S. online grocery retailer. Our preliminary results suggest that customers are relatively tolerant of order issues–up to a point. Beyond this tipping point they display little patience for issues of any kind.

We plan to extend these preliminary results to construct a satisfaction index to predict customer defection and purchasing behavior. Our online grocer partner plans to use this index to determine the allocation of scarce resources, and potentially to set inventory levels. Our work will provide a general roadmap for any retailer concerned with customer retention and shepherding.