IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v122y2019icp481-505.html
   My bibliography  Save this article

O2O results in traffic congestion reduction and sustainability improvement: Analysis of “Online-to-Store” channel and uniform pricing strategy

Author

Listed:
  • Niu, Baozhuang
  • Mu, Zihao
  • Li, Baixun

Abstract

This paper examines the effects of two O2O business models, (1) the uniform pricing and (2) the online-to-store channel, on traffic congestion control. We show that uniform pricing always reduces the online demand size and increases the retail price if the online logistics cost is low. Therefore, it can be a win-win-win solution for channel coordination, traffic congestion reduction and supply chain sustainability improvement. We also show that, an online-to-store channel might result in a high retail price and low online demand size, which benefits the retailer when the logistics cost is high.

Suggested Citation

  • Niu, Baozhuang & Mu, Zihao & Li, Baixun, 2019. "O2O results in traffic congestion reduction and sustainability improvement: Analysis of “Online-to-Store” channel and uniform pricing strategy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 481-505.
    • Handle: RePEc:eee:transe:v:122:y:2019:i:c:p:481-505
    DOI: 10.1016/j.tre.2018.12.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554517312851
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2018.12.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yinliang (Ricky) Tan & Janice E. Carrillo, 2017. "Strategic Analysis of the Agency Model for Digital Goods," Production and Operations Management, Production and Operations Management Society, vol. 26(4), pages 724-741, April.
    2. Xu Chen & Xiaojun Wang & Xinkuang Jiang, 2016. "The impact of power structure on the retail service supply chain with an O2O mixed channel," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(2), pages 294-301, February.
    3. Choi, Tsan-Ming & Chiu, Chun-Hung, 2012. "Mean-downside-risk and mean-variance newsvendor models: Implications for sustainable fashion retailing," International Journal of Production Economics, Elsevier, vol. 135(2), pages 552-560.
    4. He, Zhou & Cheng, T.C.E. & Dong, Jichang & Wang, Shouyang, 2016. "Evolutionary location and pricing strategies for service merchants in competitive O2O markets," European Journal of Operational Research, Elsevier, vol. 254(2), pages 595-609.
    5. Xianjun Geng & Yinliang (Ricky) Tan & Lai Wei, 2018. "How Add†on Pricing Interacts with Distribution Contracts," Production and Operations Management, Production and Operations Management Society, vol. 27(4), pages 605-623, April.
    6. Jan K. Brueckner, 2002. "Airport Congestion When Carriers Have Market Power," American Economic Review, American Economic Association, vol. 92(5), pages 1357-1375, December.
    7. Lan Luo & Jiong Sun, 2016. "New Product Design under Channel Acceptance: Brick-and-Mortar, Online-Exclusive, or Brick-and-Click," Production and Operations Management, Production and Operations Management Society, vol. 25(12), pages 2014-2034, December.
    8. Uday Rao & Alan Scheller-Wolf & Sridhar Tayur, 2000. "Development of a Rapid-Response Supply Chain at Caterpillar," Operations Research, INFORMS, vol. 48(2), pages 189-204, April.
    9. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    10. Louis Eeckhoudt & Christian Gollier & Harris Schlesinger, 1995. "The Risk-Averse (and Prudent) Newsboy," Management Science, INFORMS, vol. 41(5), pages 786-794, May.
    11. Fan Wang & Xiaopo Zhuo & Baozhuang Niu, 2016. "Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty," Sustainability, MDPI, vol. 9(1), pages 1-15, December.
    12. Shao, Jing & Yang, Hangjun & Xing, Xiaoqiang & Yang, Liu, 2016. "E-commerce and traffic congestion: An economic and policy analysis," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 91-103.
    13. Hui Li & Qiaowei Shen & Yakov Bart, 2018. "Local Market Characteristics and Online-to-Offline Commerce: An Empirical Analysis of Groupon," Management Science, INFORMS, vol. 64(4), pages 1860-1878, April.
    14. Xie, JiaPing & Liang, Ling & Liu, LuHao & Ieromonachou, Petros, 2017. "Coordination contracts of dual-channel with cooperation advertising in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 528-538.
    15. Yanyan He & Juan Zhang & Qinglong Gou & Gongbing Bi, 2018. "Supply chain decisions with reference quality effect under the O2O environment," Annals of Operations Research, Springer, vol. 268(1), pages 273-292, September.
    16. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2010. "Price and lead time decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 205(1), pages 113-126, August.
    17. K. Sridhar Moorthy, 1988. "Product and Price Competition in a Duopoly," Marketing Science, INFORMS, vol. 7(2), pages 141-168.
    18. Bin Shen & Qingying Li, 2015. "Impacts of Returning Unsold Products in Retail Outsourcing Fashion Supply Chain: A Sustainability Analysis," Sustainability, MDPI, vol. 7(2), pages 1-14, January.
    19. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    20. Ciwei Dong & Bin Shen & Pui-Sze Chow & Liu Yang & Chi To Ng, 2016. "Sustainability investment under cap-and-trade regulation," Annals of Operations Research, Springer, vol. 240(2), pages 509-531, May.
    21. Ze-Bin Wang & Yao-Yu Wang & Jian-Cai Wang, 2016. "Optimal distribution channel strategy for new and remanufactured products," Electronic Commerce Research, Springer, vol. 16(2), pages 269-295, June.
    22. Chen, Bintong & Chen, Jing, 2017. "When to introduce an online channel, and offer money back guarantees and personalized pricing?," European Journal of Operational Research, Elsevier, vol. 257(2), pages 614-624.
    23. Christopher Mayer & Todd Sinai, 2003. "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why Not All Delays Are Evil," American Economic Review, American Economic Association, vol. 93(4), pages 1194-1215, September.
    24. Zhang, Xiaoning & Yang, Hai, 2004. "The optimal cordon-based network congestion pricing problem," Transportation Research Part B: Methodological, Elsevier, vol. 38(6), pages 517-537, July.
    25. Ødegaard, Fredrik & Wilson, John G., 2016. "Dynamic pricing of primary products and ancillary services," European Journal of Operational Research, Elsevier, vol. 251(2), pages 586-599.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Niu, Baozhuang & Li, Qiyang & Liu, Yaoqi, 2020. "Conflict management in a multinational firm's production shifting decisions," International Journal of Production Economics, Elsevier, vol. 230(C).
    2. Baozhuang Niu & Lei Chen & Jie Zhang, 2017. "Sustainability Analysis of Supply Chains with Fashion Products under Alternative Power Structures and Loss-Averse Supplier," Sustainability, MDPI, vol. 9(6), pages 1-19, June.
    3. 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).
    4. Fan Wang & Xiaopo Zhuo & Baozhuang Niu, 2016. "Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty," Sustainability, MDPI, vol. 9(1), pages 1-15, December.
    5. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    6. Jiang, Changmin & Zhang, Anming, 2015. "Airport congestion pricing and terminal investment: Effects of terminal congestion, passenger types, and concessionsAuthor-Name: Wan, Yulai," Transportation Research Part B: Methodological, Elsevier, vol. 82(C), pages 91-113.
    7. Niu, Baozhuang & Xu, Jingwen & Lee, Carman K.M. & Chen, Lei, 2019. "Order timing and tax planning when selling to a rival in a low-tax emerging market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 123(C), pages 165-179.
    8. Niu, Baozhuang & Li, Qiyang & Mu, Zihao & Chen, Lei & Ji, Ping, 2021. "Platform logistics or self-logistics? Restaurants’ cooperation with online food-delivery platform considering profitability and sustainability," International Journal of Production Economics, Elsevier, vol. 234(C).
    9. Luo, Zheng & Chen, Xu & Kai, Ming, 2018. "The effect of customer value and power structure on retail supply chain product choice and pricing decisions," Omega, Elsevier, vol. 77(C), pages 115-126.
    10. Luo, Zheng & Chen, Xu & Chen, Jing & Wang, Xiaojun, 2017. "Optimal pricing policies for differentiated brands under different supply chain power structures," European Journal of Operational Research, Elsevier, vol. 259(2), pages 437-451.
    11. Cong Wang & Zongbao Zou & Shidao Geng, 2021. "Green Technology Investment in a Decentralized Supply Chain under Demand Uncertainty," Sustainability, MDPI, vol. 13(7), pages 1-25, March.
    12. Xu, Xiaoping & Zhang, Mian & He, Ping, 2020. "Coordination of a supply chain with online platform considering delivery time decision," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    13. Sun, Libo & Jiao, Xiaoting & Guo, Xiaolong & Yu, Yugang, 2022. "Pricing policies in dual distribution channels: The reference effect of official prices," European Journal of Operational Research, Elsevier, vol. 296(1), pages 146-157.
    14. Liu, Yan & Shi, Hongyan & Petruzzi, Nicholas C., 2018. "Optimal quality and quantity provisions for centralized vs. decentralized distribution: Market size uncertainty effects," European Journal of Operational Research, Elsevier, vol. 265(3), pages 1144-1158.
    15. T. M. Rofin & Biswajit Mahanty, 2018. "Optimal dual-channel supply chain configuration for product categories with different customer preference of online channel," Electronic Commerce Research, Springer, vol. 18(3), pages 507-536, September.
    16. Gong, Canran & Ignatius, Joshua & Song, Huaming & Chai, Junwu & Day, Steven James, 2024. "The Impact of Platform’s Information Sharing on Manufacturer Encroachment and Selling Format Decision," European Journal of Operational Research, Elsevier, vol. 317(1), pages 141-155.
    17. Ciwei Dong & Qingying Li & Bin Shen & Xun Tong, 2019. "Sustainability in Supply Chains with Behavioral Concerns," Sustainability, MDPI, vol. 11(15), pages 1-7, July.
    18. Joseph I. Daniel, 2011. "Congestion pricing of Canadian airports," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(1), pages 290-324, February.
    19. Wang, Lisha & Chen, Jing & Song, Huaming, 2021. "Marketplace or reseller? Platform strategy in the presence of customer returns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).
    20. Niu, Baozhuang & Chen, Lei & Zhang, Jie, 2017. "Punishing or subsidizing? Regulation analysis of sustainable fashion procurement strategies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 107(C), pages 81-96.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:122:y:2019:i:c:p:481-505. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.