Advance selling of fresh produce e‐tailer with uncertain demand and risk‐averse consumers

Abstract

Aiming to investigate whether a fresh produce e‐tailer should implement the strategy of advance selling considering the behavior of consumers' risk aversion, we build a two‐stage newsvendor decision‐making model and further explore how the advance selling value is affected by factors, such as the freshness‐keeping cost and the effect of demand information updating on reducing demand uncertainty. The results indicate that adopting advance selling strategy benefits the e‐tailer or not depends on consumer risk aversion and the effect of demand information updating on reducing demand uncertainty. The increasing effect of demand information updating on reducing demand uncertainty is conducive to improving the value of advance selling, and the freshness‐keeping cost may increase or decrease the value of advance selling. Besides, adopting the strategy of advance selling may benefit both the e‐tailer and the consumers under certain conditions.