Retailers have long struggled with out-of-stocks. This challenge has been further emphasized for grocery retailers operating the online channel, mainly using stores for fulfillment (e.g., buy-online-pick-up-in-store and ship-from-store). Consequently, online customers commonly receive orders where products have been substituted, where products are only partially fulfilled, or where a full reimbursement has been issued from
the missing items. When these order fulfillment failures occur, the customer may change his future purchase behavior by purchasing less frequently or making purchases of lower basket value in this online channel. Using data from the online operation of a leading omnichannel grocery retailer, we first evaluate the magnitude of the impact of fulfillment failures on future online purchases and then we explore the role of retailer
responses in mitigating this impact.