Center for Applied Mathematics Colloquium
This talk is co-sponsored by the Cornell + r4 AAI Initiative as part of the Data Science Seminar Series.
Abstract: This paper studies the environmental impact of the advent of online grocery retailing. We build a model of the online and offline grocery supply chains that includes suppliers, offline and online retailers, delivery infrastructure, and households. All firms and households optimally manage their inventory— choosing when, where and how many groceries to buy; online retailers also optimally deploy a delivery fleet. We compare the food waste and transportation emissions before and after the advent of online grocers to identify markets with emissions reductions. Our analyses reveal that the impact is driven by three key factors–(i) which households switch to online grocery retailing (only households far from physical stores, or even those that are relatively close), (ii) the shopping patterns–frequency and basket size–in online shopping and how they differ from those in offline shopping and (iii) how the first two factors change the inventory holdings at different tiers in the channels, in particular how they change the statistical scale economies of different channels by centralizing or decentralizing inventory holdings. Overall, the direction and extent of all three factors derives primarily from the structure of the pricing scheme (unit price and delivery fees) offered by the online retailer. In general, moderate grocery prices and delivery fees lead to a favorable self-selection of households into online adoption, appropriate shopping patterns, and beneficial inventory centralization. Numerical calibration reveals that the geography, demographics and prices offered in most US cities are such that the advent of online grocery is beneficial, leading to 8-41% emission reductions. Cities that are more congested, wealthier, and with few physical stores have the biggest gains. The benefits are even higher with hybrid delivery models, where online orders are fulfilled from existing physical stores.
Bio: Elena Belavina is an Associate Professor at the SC Johnson College of Business. She collaborates with startups, established companies and public agencies to study issues of sustainable urban transportation, food waste, grocery retail and supply chains. Her recent research has studied how the grocery industry's structure and pricing policies influence food waste, the environmental impact of online grocery shopping and the design of bike-share systems. She has also studied sustainable sourcing, relational contracts and supply network design including the role of supply chain intermediaries. Methodologically, her research involves holistic analysis of logistic and economic systems, and econometric analysis of large datasets to advise on system improvements and policies.
Prior to joining Johnson, Elena was on the faculty of the Booth school at Chicago, earned a Ph.D. from INSEAD and bachelor and master degrees in applied mathematics and physics from the Moscow Institute of Physics and Technology.