Optimal shipping quantity, product pricing strategies and carbon emissions of online retailers under a new logistics mode

Abstract

A new logistics mode has emerged in online retailing, which ships products before customers place orders online to reduce the waiting time for customers to receive them. The existing research on this logistics mode mainly focuses on the shipping quantity (i.e., the quantity of products to be shipped in advance from the order fulfillment center to the distribution center nearby customers before the order is placed online), while the product pricing problem and carbon emissions have not been studied comprehensively. Moreover, the risk attitudes of decision-makers have been ignored in the studies related to this new logistics mode. This paper builds an extended newsvendor model to explore the optimal joint decision problem of shipping quantity and product pricing under this new logistics mode and analyzes the carbon emissions of this new logistics mode compared with the traditional logistics mode. We consider decision-makers to be risk averse and take Conditional Value-at-Risk (CVaR) as the risk measure criterion. For both multiplicative and additive demand models, we obtain the closed-form solution of the optimal strategy. The differences between the optimal strategies of risk-averse and risk-neutral decision-makers and between the optimal strategies of this logistics mode and the traditional one have also been explored. Based on the optimal shipping quantity and product pricing strategies, we analyze the carbon emission variation of this logistics mode compared with the traditional one and provide sufficient conditions for reducing carbon emissions. Numerical experiments verify the theoretical conclusions and analyze the effect of some parameters on the optimal strategy, profit and carbon emission variation. The results show that online retailers should reduce product price in this new logistics mode compared with the traditional one. The risk-aversion degree slightly affects the optimal price but significantly affects the shipping quantity. Moreover, implementing this new logistics mode contributes to reducing carbon emissions compared with the traditional logistics mode in most cases. This study helps support online retailers in developing shipping quantity and product pricing strategies under this new logistics mode and helps the Environmental Protection Association to understand the carbon emissions under this new logistics mode so that relevant strategies can be developed.