Abstract
Mutual shifts in offline and online demand have become the norm in supply chain operations. The online-to-offline (O2O) supply chain system consists of a platform vendor, a physical store, and a product. The platform vendor sells the product directly online and governs either the centralized decision-making of a self-operated store or the decentralized decision-making of a franchised store offline. In this study, supply chain decision models with and without demand shifts are constructed to obtain optimal wholesale and selling prices and to maximize profit. The coordination mechanism under decentralized decision-making is designed to optimize the O2O supply chain, and the validity and applicability of the model are verified by numerical simulation. Results show that, regardless of whether a store is self-operated or franchised, the total profit of the system increases, and online and offline prices depend on a range of demand shifts. With an increased proportion of online demand shifts, the offline selling price and total profit of the system increase, whereas the online selling price and profit of the platform vendor decrease under decentralized decision-making. When the fixed transfer payment fee is within a certain range, a two-part-tariff contract can effectively coordinate the supply chain. This study not only contributes to the theoretical literature on O2O supply chain systems but also provides practical decision-making support for managers.
Highlights
Recent developments in e-commerce have made it very convenient for customers to buy commodities and services.erefore, online-to-offline (O2O) sales are a widespread phenomenon
From Proposition 7, regardless of what sales strategy the platform vendor adopts, when demand shifts from online to offline (0 < θ ≤ μ), the online selling price becomes lower than it was before the shift
When demand shifts from offline to online (μ − 1 ≤ θ < 0), the online selling price becomes higher than it was before the shift, but the selling price of the offline store becomes lower than it was before the shift
Summary
Recent developments in e-commerce have made it very convenient for customers to buy commodities and services. Freshhema, Dianping, Ganji, and Koubei have all embraced the O2O business model In this connection, researchers have designed a sustainable supply chain that considers life cycle assessment [2] and analyzed social welfare and price competition in a mixed duopoly [3]. An increasing number of firms are combining resources to achieve optimized resource allocation Firms such as Suning, GOME, Jetsetter, Uniqlo, JD.com, Didi Taxi, Tencent, and Airbnb, having adopted dual-channel practices, coordinate decision-making issues that mainly involve pricing systems, channel conflicts, inventory strategies, and consumer preferences. Coordinating online and offline prices and business strategies to cope with market demand shifts is critical to improving overall performance. E present study makes three contributions to research on selling as a part of business operations It examines the influence of self-operated versus franchised stores on optimal performance, further enhancing understanding of online and offline selling strategies.
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