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Digital coupon promotion and platform selection in the presence of delivery effort

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  • Jiang, Yuqing
  • Liu, Fan
  • Lim, Andrew

Abstract

In recent years, physical retailers have started selling products to consumers through either third-party or self-operated online platforms. Doing so, they face demand which depends on digital coupon promotions, delivery effort by the platform (i.e., deliver products from retailers to consumers), and channel preference. In this paper, we develop a game-theoretic model to examine the interactions between the physical retailer's distribution channel choices and coupon promotions. In normal operation, retailers prefer to pay lower fees to the third-party platform, but we find, counterintuitively, that when carrying on a digital coupon promotion, the retailer can be better off paying a higher participation fee to the third-party platform. We also identify the conditions under which the retailer prefers the third-party platform over the self-operated platform with and without coupon promotions. Furthermore, we show that digital coupon promotions and delivery effort boost the retailer's profits by price discriminating among consumers with differing purchase utilities.

Suggested Citation

  • Jiang, Yuqing & Liu, Fan & Lim, Andrew, 2021. "Digital coupon promotion and platform selection in the presence of delivery effort," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:joreco:v:62:y:2021:i:c:s0969698921001788
    DOI: 10.1016/j.jretconser.2021.102612
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    3. Uzir, Md. Uzir Hossain & Al Halbusi, Hussam & Thurasamy, Ramayah & Thiam Hock, Rodney Lim & Aljaberi, Musheer A. & Hasan, Najmul & Hamid, Mahmud, 2021. "The effects of service quality, perceived value and trust in home delivery service personnel on customer satisfaction: Evidence from a developing country," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    4. Tsai, Pei-Hsuan & Chen, Chih-Jou & Hsiao, Wei-Hung & Lin, Chin-Tsai, 2023. "Factors influencing the consumers’ behavioural intention to use online food delivery service: Empirical evidence from Taiwan," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).

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