Optimal pricing and ordering strategies for dual-channel retailing with different shipping policies

<p style='text-indent:20px;'>In this paper, considering dual-channel retailing (online channel and offline channel), we study the pricing and ordering problem under different shipping policies. In this research, we mainly consider three shipping policies: without shipping price (OSP), with shipping price (WSP) and conditional free shipping (CFP). Based on the principle of maximum utility, we firstly obtain the probability of demand for the online and offline channels and further model the pricing and ordering problem under the three shipping policies. Further, avoiding the curse of dimensionality, the deep deterministic policy gradient (DDPG) method is employed to solve the problem to obtain the optimal pricing and ordering policy. Finally, we conduct some numerical experiments to compare the optimal pricing and ordering quantity under the three different shipping policies and reveal some managerial insights. The results show that the conditional free shipping policy is better than the other two policies, and stimulates the increase of demand to gain more profit.</p>

Offline-Channel Planning in Smart Omnichannel Retailing

Problem definition: Observing the retail industry inevitably evolving into omnichannel, we study an offline-channel planning problem that helps an omnichannel retailer make store location and location-dependent assortment decisions in its offline channel to maximize profit across both online and offline channels, given that customers’ purchase decisions depend on not only their preferences across products but also, their valuation discrepancies across channels, as well as the hassle costs incurred. Academic/practical relevance: The proposed model and the solution approach extend the literature on retail-channel management, omnichannel assortment planning, and the broader field of smart retailing/cities. Methodology: We derive parameterized models to capture customers’ channel choice and product choice behaviors and customize a corresponding parameter estimation approach employing the expectation-maximization method. To solve the proposed optimization model, we develop a tractable mixed integer second-order conic programming reformulation and explore the structural properties of the reformulation to derive strengthening cuts in closed form. Results: We numerically validate the efficacy of the proposed solution approach and demonstrate the parameter estimation approach. We further draw managerial insights from the numerical studies using real data sets. Managerial implications: We verify that omnichannel retailers should provide location-dependent offline assortments. In addition, our benchmark studies reveal the necessity and significance of jointly determining offline store locations and assortments, as well as of incorporating the online channel while making offline-channel planning decisions.

Generational Differences of Consumers: A Study of Preferred Purchasing Channels

The development of the Internet and current technologies have contributed to significant progress in the consumer purchasing process. Nowadays, the decision is much easier and more intuitive. Companies are focusing on tracking the shopping path of customers who are exposed meet companies through many different channels and contact points, both online and offline (Baxendale et al. 2015). This means that consumers are not limited to online or offline channels, they obtain information from both sources. In the age of the Internet and the rapid development of technology, the purchasing process is becoming increasingly fragmented, blurring the boundaries between online and offline channels. The integration of these channels is therefore becoming key to ensuring a smooth and convenient purchasing process (Piotrowicz and Cuthbertson 2014). Given this fact, our goal was to examine which purchasing channels (single-channel or cross-channel) Slovak consumers prefer. This study focused on identifying differences between consumers in terms of generations X, Y and Z. Keywords: Consumer Behaviour, Shopping, Cross-Channel, Showrooming, Webrooming

ONLINE PRICING FOR SMALL MEDIUM ENTERPRISES’ PRODUCTS IN THE EX-LOCALIZATION OF DOLLY SURABAYA

Numerous Small and Medium Enterprises (SMEs) do not have a basic method in pricing decisions. Many times, this decision comes up based on an intuitive probe instead of a detailed analysis. This could lead to marketing problems, which may result in disruptions of financial liquidity. This also applies to SMEs wishing to sell products through the online channel. They need a proper pricing strategy, considering its different marketing strategies. Sales made through both offline channels (conventional stores) and online channels are known as Dual-Channel Supply Chain (DCSC). It is argued that the pricing decision at DCSC needs to consider consumer preferences in selecting the sales channel. One assumption commonly adopted in the DCSC pricing model is that the lost value if consumers purchase products through online channels. Therefore, the pricing decision for the online channel should be cheaper than the price on the offline channel. This study aims to assist SMEs in the ex-localization of Dolly in Surabaya in determining the price of products to be sold through online channels. Three types of products: batik, chips, and leather shoes were selected as research samples to represent the product groups: craft, fashion, and processed food. This study proposes an optimal online price strategy through experiments with a mathematical model. Model parameters, namely consumer preferences in choosing sales channels, are obtained through surveys. Apart from that, surveys are also used to reveal which platforms consumers are interested in shopping online. Shopee and Instagram were chosen by respondents as the most popular marketplaces and social media for online shopping. Finally, the online prices proposed for the batik product are IDR 82,500-IDR 66,000; chips Rp7,620-Rp6,336; and leather shoes Rp.103,800-Rp82,200.

Getting the most from E-commerce in the context of omnichannel strategies

E-commerce in the context of sales and distribution strategy has become a heavily used channel and companies need to manage it correctly and integrate it with a variety of other online and offline channels. Based on the literature, two factors are recognized as relevant for the elaboration of a conceptual framework able to explain the actions undertaken by leading companies to effectively get the most from an e-commerce strategy integrated within the overall omnichannel strategy. The two factors are: main distribution channel (direct/indirect) and product value density (high/low). Through the analysis of four case studies (Luxottica, Henkel, Ikea, and Ferragamo), we show that these factors produce different benefits and challenges that companies face when embracing e-commerce. We analyze these benefits and challenges from the viewpoint of both Marketing and Supply Chain Management.

Optimal pricing decisions for multichannel healthcare service with differing consemers’ knowledge levels

Purpose The purpose of this paper is to establish a stylized model to solve the pricing strategy, resource allocation and consumer surplus problems of multichannel healthcare services. Design/methodology/approach This paper considers a two-stage decision model with different levels of consumers’ knowledge. Faced with physical problems, knowledgeable consumers can solve their problems by seeking online healthcare channels, while unknowledgeable consumers need to make a two-stage decision to try to solve their problems. Findings The effective diagnosis rate and the proportion of knowledgeable consumers positively impact the optimal pricing in online and offline channels. In addition, a higher proportion of knowledgeable consumers does not result in higher demand in the online and offline channels. Moreover, if service providers lower their prices a small amount, they will lose some profit, but the consumer surplus will be higher, which will encourage more consumers to access healthcare services. Research limitations/implications Knowledge levels are simplified into two categories. Also, the authors assume the resources of online and offline healthcare services are comparable. Originality/value This paper incorporates the knowledge level and misdiagnosis rate into the model framework to study the most effective pricing strategy for multichannel healthcare services.

Why and how do individual entrepreneurs use digital channels in an emerging market? Determinants of use and channel coordination

PurposeMany studies have examined the use of social media by either customers or firms, especially in developed markets. However, little is known about why young individual entrepreneurs use digital channels (DCs) as business platforms in emerging markets (EMs) and how they integrate them into their marketing activities. This paper aims to try filling this gap.Design/methodology/approachGiven the exploratory nature of this research, the authors employ a qualitative approach based on a focus group (12 participants) and semi-structured interviews (8 participants) with young entrepreneurs in Saudi Arabia. The authors adopted a deductive thematic analysis based on pre-determined theoretical frameworks to analyse and interpret the data.FindingsThe authors found that the young entrepreneurs mainly used Instagram, Snapchat and, to a moderate extent, YouTube as digital marketing channels for advertising purposes. However, they used WhatsApp for establishing direct contact and personalising communication with customers. The entrepreneurs used these channels because they are useful, easy to use, cost-effective, fun and widely used by local customers. The authors also found that the entrepreneurs used social media and offline channels conjointly in three main marketing activities (communication/promotion, transactions and customer service) to boost the customer purchasing process. The complementarity of social media and offline channels was found to improve brand visibility, enlarge markets and strengthen the customer relationship. However, the achievement of these benefits varied across small firms depending on the entrepreneurs' abilities in coordinating multiple channels and according to the distinctiveness of their businesses.Research limitations/implicationsThis study contributes to the entrepreneurial literature by extending the unified theory of acceptance and use of technology (UTAUT) to explain the motives behind the use of DCs amongst individual entrepreneurs. Furthermore, this paper proposes a novel theoretical framework for studying the interaction between online and offline marketing channels during the purchasing process. Through this framework, the study provides new insights into channel coordination and multi-channel customer behaviours from the entrepreneur's perspective.Practical implicationsThis study helps understand why small firms use different DCs. Likewise, it shows how young entrepreneurs coordinate online/offline channels in a complementary manner. The findings could also help in designing appropriate programmes encouraging young entrepreneurs to use online channels and social media to enhance their business activities.Originality/valueThis study offers a novel attempt at explaining the use of DCs and their interaction with traditional channels from the entrepreneur's perspective and brings new insights to why and how young entrepreneurs use DCs in an emerging market.