“Order-online-and-pickup-offline” strategy for online direct sale of time-sensitive commodities

¹ School of Economics and Management, Southeast University, No. 2 Sipailou, Nanjing 210096, P.R. China
² Weldon School of Biomedical Engineering, Purdue University, West Lafayette, IN, USA

^* Corresponding author: ldzhao@seu.edu.cn

Received: 3 May 2019
Accepted: 19 February 2020

Abstract

Although recent decades have witnessed rapid development of e-commerce, direct sale of time-sensitive commodities on e-commerce platforms still faces significant challenges due to the dilemma between short delivery time and high delivery costs. To alleviate these challenges, manufacturers with online retailing operations have attempted to cooperate with offline retailers by using an “order-online, pickup-offline” (OOPO) strategy. To study the problem of effectively implementing the OOPO strategy for time-sensitive commodities, we consider a mechanism under which the manufacturer pays the retailers a cooperative service fee to ensure delivery coordination between the online and offline channels. We develop Stackelberg game-theoretic models to compare the profits of both delivery channels before and after the implementation of the OOPO strategy. By analyzing the models, we derive a feasible range on the cooperative service fee such that both channels are more profitable with the implementation. We further examine the plausibility of implementing the strategy when both channels are required to charge the same price on the commodities, which can lead to both channel coordination and pricing coordination.