IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v141y2020ics1366554520306876.html
   My bibliography  Save this article

Removing barriers for grocery stores: O2O platform and self-scheduling delivery capacity

Author

Listed:
  • He, Bo
  • Mirchandani, Prakash
  • Wang, Yong

Abstract

An O2O (Online-to-Offline) channel has advantages over brick-and-mortar retailing and traditional e-commerce in the local market as it facilitates grocery retailers to offer online retailing and offline home delivery. This paper studies how an O2O platform can attract physical (offline) grocery retailers through pricing and market expansion, and customers by providing shopping convenience and home-delivery. We analyze both when the O2O platform has self-scheduling delivery capacity and when it does not. We find that two widely used pricing schemes—revenue sharing and fixed fee—are equivalent. If the O2O platform does not itself have any self-scheduling delivery capacity, it outsources home-delivery service to a delivery platform, which may result in incentive misalignment. We find that it is not always necessary for the O2O platform to coordinate the decentralized system. Under some conditions, the decentralized system will yield higher profit than the centralized system due to the risk protection effect. If coordination is needed, we propose subsidy contracts for the O2O platform to align its and the delivery platform’s objectives.

Suggested Citation

  • He, Bo & Mirchandani, Prakash & Wang, Yong, 2020. "Removing barriers for grocery stores: O2O platform and self-scheduling delivery capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:transe:v:141:y:2020:i:c:s1366554520306876
    DOI: 10.1016/j.tre.2020.102036
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554520306876
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2020.102036?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. Gérard P. Cachon & Kaitlin M. Daniels & Ruben Lobel, 2017. "The Role of Surge Pricing on a Service Platform with Self-Scheduling Capacity," Manufacturing & Service Operations Management, INFORMS, vol. 19(3), pages 368-384, July.
    2. Lin Tian & Asoo J. Vakharia & Yinliang (Ricky) Tan & Yifan Xu, 2018. "Marketplace, Reseller, or Hybrid: Strategic Analysis of an Emerging E‐Commerce Model," Production and Operations Management, Production and Operations Management Society, vol. 27(8), pages 1595-1610, August.
    3. Terry A. Taylor, 2018. "On-Demand Service Platforms," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 704-720, October.
    4. Elena Belavina & Karan Girotra & Ashish Kabra, 2017. "Online Grocery Retail: Revenue Models and Environmental Impact," Management Science, INFORMS, vol. 63(6), pages 1781-1799, June.
    5. Punel, Aymeric & Stathopoulos, Amanda, 2017. "Modeling the acceptability of crowdsourced goods deliveries: Role of context and experience effects," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 105(C), pages 18-38.
    6. Li, Jianbin & Zheng, Yuting & Dai, Bin & Yu, Jiang, 2020. "Implications of matching and pricing strategies for multiple-delivery-points service in a freight O2O platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    7. Serguei Netessine & Nils Rudi, 2006. "Supply Chain Choice on the Internet," Management Science, INFORMS, vol. 52(6), pages 844-864, June.
    8. Xuanming Su, 2010. "Intertemporal Pricing and Consumer Stockpiling," Operations Research, INFORMS, vol. 58(4-part-2), pages 1133-1147, August.
    9. Wang, Shiying & Chen, Huimiao & Wu, Desheng, 2019. "Regulating platform competition in two-sided markets under the O2O era," International Journal of Production Economics, Elsevier, vol. 215(C), pages 131-143.
    10. Du, Shaofu & Wang, Lei & Hu, Li & Zhu, Yangguang, 2019. "Platform-led green advertising: Promote the best or promote by performance," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 128(C), pages 115-131.
    11. Pradeep K. Chintagunta & Junhong Chu & Javier Cebollada, 2012. "Quantifying Transaction Costs in Online/Off-line Grocery Channel Choice," Marketing Science, INFORMS, vol. 31(1), pages 96-114, January.
    12. Guillermo Marshall & Tiago Pires, 2018. "Measuring the Impact of Travel Costs on Grocery Shopping," Economic Journal, Royal Economic Society, vol. 128(614), pages 2538-2557, September.
    13. Zhou, Yong-Wu & Lin, Xiaogang & Zhong, Yuanguang & Xie, Wei, 2019. "Contract selection for a multi-service sharing platform with self-scheduling capacity," Omega, Elsevier, vol. 86(C), pages 198-217.
    14. Zhang, Jianqiang & Cao, Qingning & He, Xiuli, 2019. "Contract and product quality in platform selling," European Journal of Operational Research, Elsevier, vol. 272(3), pages 928-944.
    15. Choi, Tsan-Ming & He, Yanyan, 2019. "Peer-to-peer collaborative consumption for fashion products in the sharing economy: Platform operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 49-65.
    16. Teck-Hua Ho & Christopher S. Tang & David R. Bell, 1998. "Rational Shopping Behavior and the Option Value of Variable Pricing," Management Science, INFORMS, vol. 44(12-Part-2), pages 145-160, December.
    17. Stefanus Jasin & Amitabh Sinha, 2015. "An LP-Based Correlated Rounding Scheme for Multi-Item Ecommerce Order Fulfillment," Operations Research, INFORMS, vol. 63(6), pages 1336-1351, December.
    18. Santiago Gallino & Antonio Moreno & Ioannis Stamatopoulos, 2017. "Channel Integration, Sales Dispersion, and Inventory Management," Management Science, INFORMS, vol. 63(9), pages 2813-2831, September.
    19. Liu, Weihua & Yan, Xiaoyu & Wei, Wanying & Xie, Dong, 2019. "Pricing decisions for service platform with provider’s threshold participating quantity, value-added service and matching ability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 410-432.
    20. Kung, Ling-Chieh & Zhong, Guan-Yu, 2017. "The optimal pricing strategy for two-sided platform delivery in the sharing economy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 1-12.
    21. Benny Mantin & Harish Krishnan & Tirtha Dhar, 2014. "The Strategic Role of Third-Party Marketplaces in Retailing," Production and Operations Management, Production and Operations Management Society, vol. 23(11), pages 1937-1949, November.
    22. Jin, Ming & Li, Gang & Cheng, T.C.E., 2018. "Buy online and pick up in-store: Design of the service area," European Journal of Operational Research, Elsevier, vol. 268(2), pages 613-623.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. He, Shan & Dai, Ying & Ma, Zu-Jun, 2023. "To offer or not to offer? The optimal value-insured strategy for crowdsourced delivery platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    2. He, Bo & Gupta, Varun & Mirchandani, Prakash, 2021. "Online selling through O2O platform or on your own? Strategic implications for local Brick-and-Mortar stores," Omega, Elsevier, vol. 103(C).
    3. He, Bo & Mirchandani, Prakash & Shen, Qichao & Yang, Guang, 2021. "How should local Brick-and-Mortar retailers offer delivery service in a pandemic World? Self-building Vs. O2O platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    4. Xiaotong Guo & Yong He, 2022. "Mathematical Modeling and Optimization of Platform Service Supply Chains: A Literature Review," Mathematics, MDPI, vol. 10(22), pages 1-19, November.
    5. He, Yi & Xu, Qingyun & Shao, Zhen, 2021. "“Ship-from-store” strategy in platform retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    6. Zheng, Zhijun & Li, Gang & Cheng, T.C.E & Wu, Feng, 2022. "Offline supplementary service strategies for the online marketplace: Third-party service or marketplace service?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).

    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. He, Bo & Gupta, Varun & Mirchandani, Prakash, 2021. "Online selling through O2O platform or on your own? Strategic implications for local Brick-and-Mortar stores," Omega, Elsevier, vol. 103(C).
    2. He, Shan & Dai, Ying & Ma, Zu-Jun, 2023. "To offer or not to offer? The optimal value-insured strategy for crowdsourced delivery platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    3. He, Bo & Mirchandani, Prakash & Shen, Qichao & Yang, Guang, 2021. "How should local Brick-and-Mortar retailers offer delivery service in a pandemic World? Self-building Vs. O2O platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    4. Zhou, Xiaoyang & Chen, Kexin & Wen, Haoyu & Lin, Jun & Zhang, Kai & Tian, Xin & Wang, Shouyang & Lev, Benjamin, 2021. "Integration of third-party platforms: Does it really hurt them?," International Journal of Production Economics, Elsevier, vol. 234(C).
    5. Li, Xiang, 2020. "Reducing channel costs by investing in smart supply chain technologies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    6. Zhang, Juan & Huang, Jian, 2020. "Deceptive advertising in a crowdfunding market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 135(C).
    7. Wen, Xin & Siqin, Tana, 2020. "How do product quality uncertainties affect the sharing economy platforms with risk considerations? A mean-variance analysis," International Journal of Production Economics, Elsevier, vol. 224(C).
    8. Gérard P. Cachon & Karan Girotra & Serguei Netessine, 2020. "Interesting, Important, and Impactful Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 22(1), pages 214-222, January.
    9. Liu, Weihua & Yan, Xiaoyu & Li, Xiang & Wei, Wanying, 2020. "The impacts of market size and data-driven marketing on the sales mode selection in an Internet platform based supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    10. Hou, Ting & Zhang, Wen, 2021. "Optimal two-stage elimination contests for crowdsourcing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    11. Zhou, Yu & Gao, Xiang & Luo, Suyuan & Xiong, Yu & Ye, Niangyue, 2022. "Anti-Counterfeiting in a retail Platform: A Game-Theoretic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    12. Yu, Jianjun & Fang, Yanli & Zhong, Yuanguang & Zhang, Xiong & Zhang, Ruijie, 2022. "Pricing and quality strategies for an on-demand housekeeping platform with customer-intensive services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    13. Wei, Wanying & Liu, Weihua & Tang, Ou & Dong, Chuanwen & Liang, Yanjie, 2023. "CSR investment for a two-sided platform: Network externality and risk aversion," European Journal of Operational Research, Elsevier, vol. 307(2), pages 694-712.
    14. He, Peng & He, Yong & Tang, Xiaoying & Ma, Shigui & Xu, Henry, 2022. "Channel encroachment and logistics integration strategies in an e-commerce platform service supply chain," International Journal of Production Economics, Elsevier, vol. 244(C).
    15. Sun, Xiaojie & Tang, Wansheng & Chen, Jing & Zhang, Jianxiong, 2020. "Optimal investment strategy of a free-floating sharing platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 138(C).
    16. Meijian Yang & Enjun Xia, 2021. "A Systematic Literature Review on Pricing Strategies in the Sharing Economy," Sustainability, MDPI, vol. 13(17), pages 1-28, August.
    17. Choi, Tsan-Ming & Guo, Shu & Liu, Na & Shi, Xiutian, 2020. "Optimal pricing in on-demand-service-platform-operations with hired agents and risk-sensitive customers in the blockchain era," European Journal of Operational Research, Elsevier, vol. 284(3), pages 1031-1042.
    18. Zhang, Yu & Huang, Min & Tian, Lin & Jin, Delong & Cai, Gangshu(George), 2021. "Build or join a sharing platform? The choice of manufacturer's sharing mode," International Journal of Production Economics, Elsevier, vol. 231(C).
    19. Nils Boysen & Stefan Fedtke & Stefan Schwerdfeger, 2021. "Last-mile delivery concepts: a survey from an operational research perspective," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 43(1), pages 1-58, March.
    20. Siqin, Tana & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Optimal E-tailing channel structure and service contracting in the platform era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).

    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:141:y:2020:i:c:s1366554520306876. 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.