Abstract
In this study, we have examined the performance of an online seller under two distinct fulfillment modes (fulfillment by seller and fulfillment by E-marketplace) under two shipping fee policies (free shipping and flat rate shipping). We have derived closed form analytical expressions for the decision variables of the seller such as sale price, sales volume and profit under the fulfillment modes for the shipping policies under consideration. We have checked the validity of the model by considering a leading Indian E-marketplace. From the case example, we obtained the following results (1) The seller is better off when engaged in a contract with the E-marketplace for inventory storage and order fulfillment (2) The seller is gainful by adopting a free shipping policy than a flat rate shipping policy (3) The impact of referral fee variation by the E-marketplace can significantly affect the profit of the seller whereas the impact of lead time variation has minimal impact on the profit of the seller.
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