A review and analysis of service level agreements and chargebacks in the retail industry

Abstract

Purpose

The purpose of this paper is to examine service level agreements (SLAs) in the retail industry and uses empirical data to draw conclusions on the relationships between SLA parameters and retailer financial performance.

Design/methodology/approach

Based on prior SLA theories, hypotheses about the impacts of SLA confidentiality, choice of chargeback mechanisms and chargeback penalty on retailer inventory turnover are tested.

Findings

Retailer inventory turnover could vary by the level of SLA confidentiality, and the variation of retailer inventory turnovers could be explained by chargeback penalty.

Research limitations/implications

The research findings may not be readily applicable to SLAs outside of the retail industry. Also, most conclusions were drawn from publicly available SLAs.

Practical implications

The significant relationships between SLA parameters and retailer inventory turnover imply that a retailer could improve its financial performance by leveraging its SLA design.

Originality/value

Not only does this study contribute to the understanding of retail SLA design in practice, but it also extends prior theories by investigating the implications of SLA design on the retailer inventory turnover.

Citation

Chen, C.-M.(J). (2018), "A review and analysis of service level agreements and chargebacks in the retail industry", The International Journal of Logistics Management, Vol. 29 No. 4, pp. 1325-1345. https://doi.org/10.1108/IJLM-09-2016-0205