Research on Retailer's Service Level and Pricing Decision under Digital Empowerment

Abstract

As the final link of the distribution channel, the retailer directly connects consumers. Therefore, its pricing and service levels directly affect consumers' purchasing decisions and further affect their own profits. Aiming at the phenomenon of e-commerce platform digital empowerment of small retailers, this paper establishes a corresponding mathematical model, conducts research on retailer service level and pricing decision-making under this model. The results found that: (1) The retailer's service decision is quite sensitive to the unit service cost, and the excessively high service cost will make the retailer give up providing high-quality services to reduce costs. (2) With the improvement of consumer service awareness, price strategy is still the most important factor affecting retailers' profits. (3) Contrary to the "free rider" behavior, with the increase in consumer service awareness, even if the higher platform's digital capabilities can ensure service quality to a certain extent, the retailer will still improve its service level accordingly.