Santiago Gallino

• David Bell, Santiago Gallino, Antonio Moreno-Garcia, Are Everywhere Stores the New Face of Retail? in MIT Sloan Management Review, Online Edition. Abstract

  Omnichannel retailers can extend their customer engagement and logistics capabilities via nontraditional sales and fulfillment locations.

• Marshall L. Fisher, Santiago Gallino, Jun Li, A Step-by-Step Guide to Real-Time Pricing in Harvard Business Review, November-December 2023. Abstract

  In today’s fast-paced world of digital retailing, the ability to revise prices swiftly and on a large scale has emerged as a decisive differentiator for companies. Many retailers now track competitors’ prices via systems that scrape rivals’ websites and use this information as an input to set their own prices manually or automatically. A common strategy is to charge X dollars or X percent less than a target competitor. However, retailers that use such simple heuristics miss significant opportunities to fine-tune pricing.

  Some companies are now applying machine-learning models to guide their pricing decisions, but even these retailers tend to take an overly limited approach. They try to match or undercut competitors’ prices without taking into account factors such as whether rivals are out of stock or how consumers make their purchasing decisions.

  In this article, we present a step-by-step process for dynamic pricing that focuses on building computer models that consider not just competitor pricing but also product availability and customer behavior to recommend optimal prices in real-time.

• Santiago Gallino, Nil Karacaoglu, Antonio Moreno-Garcia, Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces. Abstract

  Most online sales worldwide take place in online marketplaces that connect sellers and buyers. The presence of numerous third-party sellers leads to a proliferation of listings for each product, making it difficult for customers to choose between the available options. Online marketplaces adopt algorithmic tools to curate how the different listings for a product are presented to customers. This paper focuses on one such tool, the Buybox, that algorithmically chooses one option to be presented prominently to customers as a default option. We leveraged the staggered introduction of the Buybox within a prominent product category in a leading online marketplace to study how the Buybox impacts marketplace dynamics. Our findings indicate that adopting Buybox results in a substantial increase in marketplace orders and visits. Implementing Buybox reduces the frictions customers and sellers face. On the customer side, we find a reduction of search frictions, evidenced by an increase in conversion rates and a higher impact on the mobile channels, which have significantly higher search frictions than desktop channels. On the seller side, the number of sellers offering a product increases following the implementation of Buybox. Customers benefit from lower prices and higher average quality levels when competition in Buyboxes is high. After the introduction of the Buybox, the marketplace also becomes more concentrated. Our paper contributes to the burgeoning literature on the role of algorithms in platforms by examining how algorithmic curation impacts the participants of the marketplace as well as the marketplace dynamics.

• Rafael Escamilla, Jan C. Fransoo, Santiago Gallino, Order-Based Trade Credits and Operational Performance in the Nanostore Retail Channel. Abstract

  Millions of nanostores serve bottom-of-the-pyramid consumers in emerging markets. Their suppliers, consumer packaged goods (CPG) companies, struggle with high operational costs that largely stem from shopkeepers’ liquidity constraints. We empirically investigate whether suppliers can improve operational performance by allowing nanostore shopkeepers to delay order payment by a short period of time. We term this delayed payment alternative “order-based trade credit” (OBTC) and examine the key trade-off that suppliers face when transacting with it. While OBTC can create efficiency gains when selling and delivering products to nanostores, it is risky, as shopkeepers might default on their credit lines. By leveraging data from a nanostore supplier offering OBTC, we assess the effect of this novel policy on the operational perfor- mance of the supplier through a difference-in-differences approach. We find that OBTC leads to substantial gains for nanostore suppliers across a range of important operational drivers. In addition, we show when the benefits of OBTC compensate the risk suppliers take in providing it.

• Carolyn Deller and Santiago Gallino (Working), Pay for Quantity or Time? Implications for Work Speed and Quality. Abstract

  We examine how paying workers a fixed amount for a pre-specified quantity of work vis-à-vis paying workers a fixed amount for a pre-specified amount of time for a quality-focused task affects the time spent per unit of work and the quality achieved. Across two experiments, we find no evidence—contrary to our expectations—that workers paid for a set quantity of work spend less time on each unit (i.e., work faster) than workers paid for a set amount of time. In fact, in our second experiment, we find workers paid for a set quantity of work spend more time on each unit on average. These workers also achieve greater quality. These findings, together with the worker outcomes we observe when workers are told what is valued (quality, speed, or both), are consistent with the idea that the design of fixed compensation schemes can influence employee effort and performance, despite no compensation consequences, by implicitly communicating what is valued.

• Marshall L. Fisher and Santiago Gallino, The Future of Retail Grocery Store Labor. Abstract

  We report here the results of a study to learn about the evolving store labor practices of leading (mostly grocery) retailers, including the current state of practice, what problems the retailers are struggling with currently, and implications for the industry. We first report on a series of interviews with senior executives at 15 grocery retailers and then present a tabulation of results of a written survey completed by 60 retail executives in 10 countries. An Appendix provides a survey of relevant published literature, the questionnaire sent to interviewees to guide our discussions with them, the written survey questions and a tabulation of survey responses segmented by U.S. retailers, non U.S. retailers and academics.

   

  There are three main insights from our study: 1) labor market conditions have been challenging in recent months, and this is not likely to change in the near future; 2) retailers need to rethink their approach to online grocery; and 3) thinking about labor as an asset to leverage rather than a cost to bear can be a way forward.

• Santiago Gallino, Nil Karacaoglu, Antonio (Toni) Moreno-Garcia (2022), Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail, . Abstract

  The impact of delays has been widely studied in various offline services. The focus of this study is online services, and we explore the impact of in-process delays—measured by website speed—on customer behavior. We leverage novel retail and website speed data to investigate how delays impact online sales and how customer sensitivity to in-process delays varies across the different stages of a customer’s shopping journey. We estimate sizable adverse effects of website slowdowns on online sales. Using threshold regression models, we show that customers exhibit diminishing sensitivity to increases in website slowdowns. Our results suggest that waiting times affect customer abandonment differently at different stages of the shopping journey. Customers are more sensitive to slowdowns at the checkout stage. Our findings have implications for website design decisions such as improving website speed at the checkout stage, selecting third-party content providers, and customizing the design of mobile and desktop channels. The paper’s results are especially relevant in the current regulatory environment with ongoing policy debates about net neutrality.

  Related
  Links
• Santiago Gallino and Robert Rooderkerk, New Product Development in an Omnichannel World in California Management Review, September 2020. Abstract

  Firms compete in an increasingly omnichannel environment. Customers no longer travel a single linear path but traverse a complex map invoking many channels, firm-owned and external, seamlessly through integrated technology. The associated changes in consumer behavior and the ways that firms engage consumers have led many to reshape the way they innovate their product portfolios. This article presents a structured overview of some of the most striking changes to firms’ new product development (NPD) processes in B2C settings. Enlisting the classic NPD funnel, it describes how the omnichannel environment and its technologies affect speed and execution in each development stage. It illustrates key changes with examples from packaged goods, consumer technology, and fashion.

• David Bell, Santiago Gallino, Antonio (Toni) Moreno-Garcia (2020), Customer Supercharging in Experience-Centric Channels, Management Science. Abstract

  We conjecture that for online retailers, experience-centric offline store formats do not simply expand market coverage, but rather, serve to significantly amplify future positive customer behaviors, both online and offline. We term this phenomenon “supercharging” and test our thesis using data from a digital-first men’s apparel retailer and a pioneer of the so-called “Zero Inventory Store” (ZIS) format—a small footprint, experience- centric retail location which carries no inventory for immediate fulfillment, but fulfils orders via e-commerce. Using a risk-set matching approach, we calibrate our estimates on customers who are “treated”, i.e., have a ZIS experience, and matched with identical customers who shop online only. We find that post the ZIS experience, customers spend more, shop at a higher velocity, and are less likely to return items. The positive impact on returns is doubly virtuous as it is more pronounced for more tactile, higher-priced items, thus mitigating a key pain point of online retail. Furthermore, the ZIS shopping experience aids product discovery and brand attachment, causing sales to become more diffuse over a larger number of categories. Finally, we demonstrate that our results are robust to self-selection and potentially confounding effects of unobservable factors on the matched pairs of customers. Implications for retailing practice, including for legacy, offline-first retailers, are discussed.

  Related
  Links
• Dawson Kaaua, Santiago Gallino, Christian Terwiesch, S Mehta (Working), The Impact of Waiting Location on Customer Satisfaction: An Empirical Analysis of Preoperative Patient Flow.
• All Research from Santiago Gallino »

OIDD6970 – Retail Supply Chain Management

This course explores the dynamic and influential world of retail, an industry with a huge impact in the economy and a catalyst for new business strategies. The course is designed not only for those planning careers directly in retailing and its supply chains but also for professionals in banking, consulting, and IT services that cater to retail firms, as well as manufacturers who distribute their products through retail channels. Through a blend of case studies and interactive discussions, the course addresses universal business challenges like data management, lead time reduction, and optimizing employee performance. The curriculum is structured around key topics essential to contemporary retail: omni-channel strategy, product assortment planning, retail pricing, in-store execution, and supply chain design. Each class employs an interactive approach, integrating case discussions and guest speakers from various sectors of the industry. This practical engagement is enhanced by examining a diverse array of retail formats and product segments, ensuring a rich understanding of the retail landscape.

OIDD6730 – Global Supply Chain Management

This course delves into the evolving realm of global supply chain management, where the fusion of cutting-edge information technology and the expansion of international markets is transforming manufacturing and distribution processes. As companies navigate this complex landscape, critical decisions about in-house production versus outsourcing and managing extensive, continent-spanning supply chains are key. This course equips students with the skills to design innovative business strategies, balance cost-efficiency with quality, and adapt to dynamic global scenarios like economic shifts and regulatory changes. Through interactive case studies, simulations, and discussions with industry leaders, participants gain firsthand insights into crafting effective global supply chains and learn to maneuver the challenges of a globalized market environment.

OIDD1010 – Introduction to OIDD

OIDD 101 explores a variety of common quantitative modeling problems that arise frequently in business settings, and discusses how they can be formally modeled and solved with a combination of business insight and computer-based tools. The key topics covered include capacity management, service operations, inventory control, structured decision making, constrained optimization and simulation. This course teaches how to model complex business situations and how to master tools to improve business performance. The goal is to provide a set of foundational skills useful for future coursework atWharton as well as providing an overview of problems and techniques that characterize disciplines that comprise Operations and Information Management.

Current Courses

• OIDD6970 - Retail Supply Chain Management

  This course is highly recommended for students with an interest in pursuing careers in: (1) retailing and retail supply chains; (2) businesses like banking, consulting, information technology, that provides services to retail firms; (3) manufacturing companies (e.g. P&G) that sell their products through retail firms. Retailing is a huge industry that has consistently been an incubator for new business concepts. This course will examine how retailers understand their customers' preferences and respond with appropriate products through effective supply chain management. Supply chain management is vitally important for retailers and has been noted as the source of success for many retailers such as Wal-mart and Home Depot, and as an inhibitor of success for e-tailers as they struggle with delivery reliability. See M. L. Fisher, A. Raman and A. McClelland, "Rocket Science Retailing is Coming - Are You Ready?," Harvard Business Review, July/August 2000 for related research.

  OIDD6970002 ( Syllabus )

  OIDD6970004 ( Syllabus )

• OIDD9010 - Introduction To Oid Faculty And Their Research

  This course introduces first-year Operations, Information and Decisions (OID) PhD students to OID Department faculty members and their research. The course is designed to meet once a week, both in the fall and the spring, allowing most (if not all) OID faculty to present to first-year PhD students either classic or current research in their fields of expertise. The course's goals are twofold. First, it seeks to introduce first-year PhD students to OID faculty in a substantive (as opposed to social) manner and to expose students to the breadth of research conducted in the department. Second, through early exposure, the course aims to pique students' interest in the department's foundational courses in decision making, information systems, and operations management.

  OIDD9010001 ( Syllabus )

• OIDD9950 - Dissertation Preparation

  OIDD9950019 ( Syllabus )

  OIDD9950021 ( Syllabus )

  OIDD9950023 ( Syllabus )

  OIDD9950024 ( Syllabus )

  OIDD9950025 ( Syllabus )

  OIDD9950026 ( Syllabus )

  OIDD9950027 ( Syllabus )

  OIDD9950028 ( Syllabus )

  OIDD9950029 ( Syllabus )

  OIDD9950030 ( Syllabus )

• OIDD9999 - Independent Study

  Independent Study

  OIDD9999001 ( Syllabus )

  OIDD9999002 ( Syllabus )

  OIDD9999003 ( Syllabus )

  OIDD9999004 ( Syllabus )

  OIDD9999005 ( Syllabus )

  OIDD9999006 ( Syllabus )

  OIDD9999007 ( Syllabus )

Past Courses

• OIDD1010 - Introduction To Oidd

  OIDD 101 explores a variety of common quantitative modeling problems that arise frequently in business settings, and discusses how they can be formally modeled and solved with a combination of business insight and computer-based tools. The key topics covered include capacity management, service operations, inventory control, structured decision making, constrained optimization and simulation. This course teaches how to model complex business situations and how to master tools to improve business performance. The goal is to provide a set of foundational skills useful for future coursework atWharton as well as providing an overview of problems and techniques that characterize disciplines that comprise Operations and Information Management.

• OIDD6110 - Quality and Productivity

  Matching supply with demand is an enormous challenge for firms: excess supply is too costly, inadequate supply irritates customers. In the course, we will explore how firms can better organize their operations so that they more effectively align their supply with the demand for their products and services. Throughout the course, we illustrate mathematical analysis applied to real operational challenges--we seek rigor and relevance. Our aim is to provide both tactical knowledge and high-level insights needed by general managers and management consultants. We will demonstrate that companies can use (and have used) the principles from this course to significantly enhance their competitiveness.

• OIDD6150 - Operations Strategy

  Operations strategy is about organizing people and resources to gain a competitive advantage in the delivery of products (both goods and services) to customers. This course approaches this challenge primarily from two perspectives: 1) how should a firm design their products so that they can be profitably offered; 2) how can a firm best organize and acquire resources to deliver its portfolio of products to customers. To be able to make intelligent decisions regarding these high-level choices, this course also provides a foundation of analytical methods. These methods give students a conceptual framework for understanding the linkage between how a firm manages its supply and how well that supply matches the firm's resulting demand. Specific course topics include designing service systems, managing inventory and product variety, capacity planning, approaches to sourcing and supplier management, constructing global supply chains, managing sustainability initiatives, and revenue management. This course emphasizes both quantitative tools and qualitative frameworks. Neither is more important than the other.

• OIDD6730 - Global Supply Chain Mgmt

  Several forces, ranging from technology that has dramatically reduced the cost of communication, to political developments such as the opening up of China, Vietnam, and Eastern Europe, have created an avalanche of outsourcing and offshoring and lead to supply chains that stretch halfway around the world. This course will study the many questions that arise in the management of such global supply chains, including: Which design and production activities to do in-house and which to outsource? Where to locate various activities around the world? How to forecast the many factors that influence these decisions, including inflation in cost factors such as labor and freight, and the likelihood of future government regulation or political instability? How to keep the supply chain flexible so as to adapt to change? How to manage a geographically disbursed supply chain, including what relationships to have with vendors to ensure low cost, high quality, flexibility, safety, humane labor practices and respect for sustainability of the environment? The course is highly interactive, using case discussions in most classes and senior supply chain executives in many sessions. Grades are based one-third each on class participation, individual write-ups of the discussion questions for 3 of the class sessions, and a course paper.

• OIDD6970 - Retail Supp Chain Mgmt

  This course is highly recommended for students with an interest in pursuing careers in: (1) retailing and retail supply chains; (2) businesses like banking, consulting, information technology, that provides services to retail firms; (3) manufacturing companies (e.g. P&G) that sell their products through retail firms. Retailing is a huge industry that has consistently been an incubator for new business concepts. This course will examine how retailers understand their customers' preferences and respond with appropriate products through effective supply chain management. Supply chain management is vitally important for retailers and has been noted as the source of success for many retailers such as Wal-mart and Home Depot, and as an inhibitor of success for e-tailers as they struggle with delivery reliability. See M. L. Fisher, A. Raman and A. McClelland, "Rocket Science Retailing is Coming - Are You Ready?," Harvard Business Review, July/August 2000 for related research.

• OIDD8970 - Global Modular Course

  Global Modular Course (GMC) - MBA

• OIDD9010 - Oid Faculty and Research

  This course introduces first-year Operations, Information and Decisions (OID) PhD students to OID Department faculty members and their research. The course is designed to meet once a week, both in the fall and the spring, allowing most (if not all) OID faculty to present to first-year PhD students either classic or current research in their fields of expertise. The course's goals are twofold. First, it seeks to introduce first-year PhD students to OID faculty in a substantive (as opposed to social) manner and to expose students to the breadth of research conducted in the department. Second, through early exposure, the course aims to pique students' interest in the department's foundational courses in decision making, information systems, and operations management.

• OIDD9999 - OIDD 9999

  Independent Study

• Goop expands wholesale footprint with Sephora - 01/07/2020
• How Zero-Inventory Stores Like Bonobos Supercharge Customers And Make Retailers More Productive, Forbes - 09/29/2019
• Inventory-free showrooms 'super-charge' customers, RetailDive - 09/26/2019
• Why dynamic and personalized pricing strategies haven't taken over retail — yet, RetailDive - 06/22/2019
• The Store Is Dead — Long Live the Store, MIT Sloan Management Review - 03/01/2018
• These Experts Say Philadelphia Is the Best Place for Amazon, Philadelphia Magazine - 01/22/2018
• This Will Be Where Amazon Puts Its Second Headquarters, According to Experts, Money - 01/19/2018
• How to Improve “Picker” Performance, HBR - 01/01/2018
• Wal-Mart Will Punish Its Suppliers for Delivering Early, Bloomberg Businessweek - 07/12/2017
• Best Free Business MOOCs In June, Poets & Quants - 05/31/2017
• How to Win in an Omnichannel World, MIT Sloan Management Review - 09/16/2014

Knowledge @ Wharton

• How Dynamic Electricity Pricing Can Improve Market Efficiency, Knowledge @ Wharton - 11/12/2024
• Is Algorithmic Management Too Controlling?, Knowledge @ Wharton - 11/12/2024
• The Hidden Cost of AI Energy Consumption, Knowledge @ Wharton - 11/12/2024
• Charitable and Political Giving | Pinar Yildirim, Knowledge @ Wharton - 11/12/2024
• The Future of Banking, Knowledge @ Wharton - 11/11/2024
• Election Statistics, Knowledge @ Wharton - 11/06/2024
• Robots Are Taking Over Low-skilled Jobs — and Changing Votes, Knowledge @ Wharton - 11/05/2024
• Crypto Politics: Liberals’ and Conservatives’ Confidence in Cryptocurrencies, Knowledge @ Wharton - 11/05/2024
• Leadership and Elections | Mike Useem, Knowledge @ Wharton - 11/05/2024
• Automation Is Harming Low-skilled Workers and Possibly Their Voting Preferences, Knowledge @ Wharton - 11/01/2024