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A local seller's app channel strategy concerning delivery

Author

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  • Zhiying Tao
  • Qinglong Gou
  • Juzhi Zhang

Abstract

When a local seller launches an app channel, it can either deliver online orders itself or use a third party service. Given this background, an interesting problem is whether and how a local seller's channel strategy will be affected by these delivery options. To investigate this problem, we focus on a local seller facing these two delivery options. For each option, besides setting the online and offline prices, the seller also determines its delivery service coverage. Assuming that consumers are evenly located along an infinite Hotelling line, we propose a joint pricing and delivery distance decision model and derive the local seller's optimal decisions in two subcases, i.e. the seller is a price taker or a price setter. By analyzing and comparing the seller's optimal decisions in these situations, we find that (i) the local seller's channel strategy will be changed dramatically by the delivery option – the seller will abandon the offline channel when it delivers itself; (ii) whether the seller is a price taker or price setter will also influence the seller's channel strategy; and (iii) unexpectedly, the highly developed just-in-time logistics is an important factor that helps the offline channel and app channel coexist in the Internet era.

Suggested Citation

  • Zhiying Tao & Qinglong Gou & Juzhi Zhang, 2020. "A local seller's app channel strategy concerning delivery," International Journal of Production Research, Taylor & Francis Journals, vol. 58(1), pages 220-255, January.
    • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:1:p:220-255
    DOI: 10.1080/00207543.2018.1535725
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    Cited by:

    1. Li, Zonghuo & Wang, Di & Yang, Wensheng & Jin, Hyun Seung, 2022. "Price, online coupon, and store service effort decisions under different omnichannel retailing models," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    2. Da, Yuwen & Gou, Qinglong & Liang, Chao, 2023. "Will self-gifting of streamers hurt unions? Analyzing the union’s compensation mechanism for a live streaming supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    3. Shen, Yinhai & Zhang, Qing & Zhang, Zhichao & Ma, Xinyu, 2022. "Omnichannel retailing return operations with consumer disappointment aversion," Operations Research Perspectives, Elsevier, vol. 9(C).
    4. Zhi-Hua Hu & Shu-Wen Wang, 2022. "An Evolutionary Game Model Between Governments and Manufacturers Considering Carbon Taxes, Subsidies, and Consumers’ Low-Carbon Preference," Dynamic Games and Applications, Springer, vol. 12(2), pages 513-551, June.
    5. 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.
    6. Du, Zhong & Fan, Zhi-Ping & Sun, Fenghao, 2023. "O2O dual-channel sales: Choices of pricing policy and delivery mode for a restaurant," International Journal of Production Economics, Elsevier, vol. 257(C).
    7. Du, Zhong & Fan, Zhi-Ping & Chen, Zhongwei, 2023. "Implications of on-time delivery service with compensation for an online food delivery platform and a restaurant," International Journal of Production Economics, Elsevier, vol. 262(C).
    8. Haoyu Liu & Shulin Liu, 2020. "Research on Advertising and Quality of Paid Apps, Considering the Effects of Reference Price and Goodwill," Mathematics, MDPI, vol. 8(5), pages 1-23, May.

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