Optimal Channel Strategy for a Fresh Produce E-Commerce Supply Chain

Abstract

As an increasing number of firms move to omnichannel operation for business sustainability, it is also necessary for fresh produce firms to adopt an omnichannel model by integrating online and offline channels. We focus on a fresh produce supply chain consisting of a supplier who sells online directly and a physical store retailer. The purpose of this paper is to explore the optimal channel selection strategy considering the fresh-keeping efforts of supply chain members. Specifically, we examine the conditions under which the supply chain members should cooperate to adopt the deliver-from-store (DFS) model and further investigate the impact of consumers’ freshness sensitivity and offline hassle cost on supply chain members’ sales model options. Several important conclusions are shown as follows. First, the retailer’s profit increases with the increasing freshness sensitivity in the dual-channel model, while it decreases if consumers are sufficiently sensitive to freshness in the DFS model. Second, if adopting the DFS model, online demand and total market demand expand, and the performance of the supplier and the retailer heavily depends on the size of the commission rate. Third, there always exists a win–win situation with an appropriate range of commission rate when the consumer’s hassle cost is large. This paper contributes to the omnichannel strategy research of fresh produce supply chain management and the results provide management insights for the sustainable development of the fresh produce industry in the omnichannel retailing environment.