Operation strategies for nanostore in community group buying

Abstract

Nanostore operations are gaining prominence in the community group buying industry. Motivated by this development, we use a stylized game-theoretical model to investigate the conditions under which the nanostore prefers different operations strategies, such as the competitive strategy, cooperative strategy, and co-opetitive strategy. Our analysis shows that a nanostore's preferred operations strategy depends on the combined market parameters. While the nanostore prefers the competitive strategy and the co-opetitive strategy in many scenarios, it prefers the cooperative strategy in a few cases. Interestingly, we show that the nanostore has more incentives to prefer the competitive (co-opetitive) strategy when the production cost of the supplier is relatively high (low). We find that the preferred operations strategy of a nanostore does not necessarily benefit the supplier and the consumers, which may lead to channel conflict. Our results underscore the important role played by a nanostore's operations strategy and provide decision-makers with managerial insights for the community group buying industry.