【正文】 nline operations. It is possible to pool retail inventory between conventional and online markets, improving the ratio of inventory to sales. This also gives online shoppers access to the full range of products available in a supermarket to which most of them will be accustomed. Another major benefit of shopbased fulfilment is that it enables the retailer to achieve a rapid rate of geographical expansion, securing market share and winning customer loyalty more quickly than petitors mitted to the fulfilment centre model. On the negative side, however, integrating conventional and online retailing operations in existing shops can impair the standard of service for both groups of customer. The online shopper is disadvantaged by not having access to a dedicated inventory. Although a particular product may be available on the shelf when the online order is placed, it is possible that by the time the picking operation gets underway “conventional” shoppers may have purchased all the available stock. Where these instore customers encounter a “stockout” they can decide themselves what alternative products to buy, if any. Online shoppers, on the other hand, rely on the retailer to make suitable substitutions. Substitution rates are reckoned to be significantly higher for storebased fulfilment systems than egrocers operating separate pick centres. For example, Ocado, the only UK egrocery to rely solely on a pick centre, claims that it can achieve substitution rates of less than 5 per cent, whereas customers using its storebased petitors sometimes experience substitution rates more than twice this level (McClellan, 2003). In paring substitution rates, however, allowance must be made for differences in product range. Ocado39。s range of around 12,500 products is less than half that of the major supermarket chains engaged in online shopping. Doubts have been expressed about the longterm sustainability of storebased fulfilment. As the volume of online sales expands, conflicts between conventional and online retailing are likely to intensify. At the “front end” of the shop, aisles may bee increasingly crowded with staff picking orders for online customers. In practice, however, much of the picking of highselling lines is done in the back store room. It is at the “backend” that space pressures may bee most acute. Over the past 20 years the trend has been for retailers to reduce the amount of back storage space in shops as instore inventory levels have dropped and quickresponse replenishment bee the norm. This now limits the capacity of existing retail outlets to support the online order fulfilment operation. New shops can, nevertheless, be purposebuilt to integrate conventional retailing and online fulfilment. The Dutch retailer Ahold has coined the term “wareroom” to describe a dedicated pick facility colocated with a conventional supermarket (Mees, 2000). Most of the purposebuilt fulfilment centres so far constructed are on separate sites. They offer a number of logistical advantages over storebased picking. As their inventory is dedicated to the online service, home shoppers can check product availability at the time of ordering and, if necessary, alter their shopping list. The order picking function should also be faster and more efficient in fulfilment centres as they are specially designed for the multiplepicking of online orders. To be costeffective, dedicated pick centres must handle a large throughput. The threshold level of throughput required for viability also depends on the breadth of the product range. It is very costly to offer an extensive range in the early stages of an etailing operation when sales volumes are low. Offering a limited range can cut the cost of the operation but make it more difficult to lure consumers from conventional retailing. Another inventoryrelated problem which retailers using pick centres have encountered is the difficulty of disposing of excess stocks of shortshelf life product. When overstocking occurs in a shop, consumer demand can be stimulated at short notice using price reductions or instore merchandising techniques. It is more difficult using electronic media to clear excess inventory of fresh produce from fulfilment centres that consumers never visit. Several studies have argued that storebased fulfilment is more appropriate in the early stages of a retailer39。s entry into the egrocery market (Fraunhofer Institute, 2002). It represents a low risk strategy and allows new business to be won at a relatively low marginal cost. As the volume of online sales grows, however, the cost and service benefits of picking orders in a dedicated centre steadily increase until this bees the more petitive option. Several breakeven analyses have been conducted to estimate the threshold online sales volume at which the fulfilment centre model is likely to be superior. Tesco appears to have reached this threshold volume in the south east of England. In 2006, it opened its first dedicated fulfilment centre in south London, known as a “Tesco only store”, because it has a similar format to a conventional shop but is used solely for the picking of online orders. It has subsequently opened two other stores at Aylesford in Kent and Greenford in London with plans to open ten in total in areas of high population density (Retail Week, March 12, 2010). The viability threshold for such dedicated operations will vary from retailer to retailer depending on the size and layout of shops, the nature of the upstream distribution system, the product range and the customer base. It will also be highly sensitive to the allocation of retail overheads between the conventional and online shopping operations. A further plicating factor is the geography of the retail market. The relative efficiency of the two types of fulfilment is likely to vary with the density of demand and level of local petition in different parts of the country. In a