Advances in technology have allowed for Internet retailers to share information across the supply chain. As a result, some Internet retailers choose to not hold physical inventories, while others may keep inventory management in-house. In this paper, we identify the factors that may persuade firms to outsource fulfillment capabilities. The results support use of drop shipping by retailers in lieu of holding physical inventories in an e-commerce market.
Key Words: e-business, e-commerce, inventory management, aggregation, simulation,
transshipment, virtual inventory, virtual order fulfillment
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