Shipping before order making: Optimal shipping quantity and pricing decisions under uncertain demand

Xu, Xianhao; Chen, Cheng; Zou, Bipan; Wang, Hongwei; Li, Zhiwen

doi:10.1016/j.tre.2022.102986

Cited by 3 publications

(1 citation statement)

References 59 publications

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“…They found that when the demand distribution information is known, using a small discount in the beginning, and marking down with an accelerating increase rate will benefit the retailer more. Under uncertain demand, the shipping quantity and pricing decisions are investigated when shipping services are provided before order making [31]. The pricing discount strategy is also considered in the context of live-streaming commerce to attract new consumers, and the optimal price discount rate for the selling format is determined to make price discount decisions in supply chains with manufacturers selling online [32].…”

Section: The Price Discount Strategy In Online Retailingmentioning

confidence: 99%

Have Your Cake and Eat It? Price Discount Programs under the Membership Free Shipping Policy in Online Retailing

Tang,

Hua,

Cheng

et al. 2024

JTAER

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Online retailers offer free shipping services, such as threshold free shipping (TFS) and membership free shipping (MFS), to promote sales and provide a better shopping experience to consumers in online retailing. Although MFS attracts more member-consumers, it encourages consumers to place more small orders than TFS, which significantly increases the operational costs of the online retailer. To address this issue, we propose two price discount policies under the MFS service, namely the limited-time discount and the threshold discount. Then, we build analytical models under these two policies to explore the impacts of offering price discounts on the retailer’s profit and consumers’ welfare. We find that no matter which discount policy is adopted, consumers are more likely to consolidate several small orders from different time periods into a big one to obtain the discount. The economies of scale generated by consumers consolidating their orders under these discount policies can help reduce online retailers’ operational costs. Therefore, regardless of any discount policy offered by the online retailer under the MFS service, consumers will place more big orders and more member-consumers are attracted, i.e., the online retailer can have its cake and eat it too. Our research findings provide decision-making insights for practitioners who offer free shipping services and price discounts to consumers in online retailing.

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Section: The Price Discount Strategy In Online Retailingmentioning

confidence: 99%