Implications of on-time delivery service with compensation for an online food delivery platform and a restaurant

Du, Zhong; Fan, Zhi‐Ping; Chen, Zhongwei

doi:10.1016/j.ijpe.2023.108896

Cited by 15 publications

(5 citation statements)

References 34 publications

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“…For instance, Kilders et al [49] used FM-BBCE to study consumers' needs and preferences when eating in restaurants and ordering take-away; they found that the price elasticity of consumers when eating in restaurants is greater than when ordering take-away, and the meals provided by in-house food and take-away food were complementary. Du et al [41] discussed the selection of two pricing strategies (unified pricing and differential pricing) and two distribution strategies (platform delivery and selfdelivery) of Chinese restaurants in O2O dual-channel sales, and the best pricing strategies of restaurants and platforms before and after the online take-out platform launched a paid on-time delivery service [50]. There were also scholars [51] who paid attention to the manipulation of online comments by restaurants and discussed the influence of the quantity and quality of competitors on the manipulation of positive and negative comments by restaurants.…”

Section: Discussionmentioning

confidence: 99%

Group Buying Pricing Strategies of O2O Restaurants in Meituan Considering Service Levels

Dai,

Ma,

Zhao

et al. 2023

Systems

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After the COVID-19 pandemic has subsided, the catering industry has returned to its previous thriving scene. Many restaurants have launched group buying services and collaborate with third-party online platforms to attract more customers. For the optimal decisions and maximum profits of restaurants and online platforms, a two-layer supply chain model is designed to investigate and study the price strategies and service strategies. Considering the service levels of restaurants and platforms, we construct the mathematical expressions of the offline retail model, online retail model, and online group buying model, respectively, and solve the game equilibrium. The results are shown as follows: (1) With cooperation between the restaurant and platform, both the restaurant and platform can obtain their maximum profits when they apply optimal pricing strategies. (2) The optimal pricing strategies of the restaurant are influenced by the sensitivity coefficients of customers to the restaurant and platform’s service levels, and the cost coefficients of the restaurant and platform’s service levels. (3) The maximum profit of the restaurant is directly proportional to the number of new potential consumers who are attracted. The more potential consumers who are attracted, the higher the profit the restaurant earns. The research results provide a reference for restaurants and platforms to formulate price strategies and service strategies, to help restaurants and platforms achieve more profits.

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Section: Discussionmentioning

confidence: 99%

Group Buying Pricing Strategies of O2O Restaurants in Meituan Considering Service Levels

Dai,

Ma,

Zhao

et al. 2023

Systems

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“…Li et al (2020) studied pricing strategies for delivery services. Du, Fun & Chen (2023) study the impact of unit takeaway delivery costs and takeaway service levels on offline demand. Tong et al (2020) evaluated the impact of factors such as weather, distance, and festivals on delivery fees.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Both Li et al (2022) and Du et al (2022) studied the delivery range through the model. Du, Fun & Sun (2023) examines the phenomenon of delivery delays in the takeout industry, where some firms offer delay compensation policies to consumers, which is closely related to the delivery range, which is an important factor affecting delivery quality. Due to the limited delivery range of the instant delivery system, customers are usually recommended to dine nearby or pay a higher delivery fee for long-distance delivery.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Strategies of the Online-to-Offline Instant Delivery Service of Grocery Retailers

Qin,

Yuhan,

Cuiting

et al. 2023

SAGE Open

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The advantages of an O2O instant delivery service over the traditional retail model for grocery retailers in the local market lie in the ability to increase sales by expanding consumer channels. This study aims to explore how merchants can optimize their pricing and delivery service decisions, including order delivery fees, range, and starting price, to maximize profit with the adoption of instant delivery services. Using the Stackelberg game model, the research examines the retailers’ optimal decision-making within the classical Hotelling linear city model while considering a more realistic cost differentiation between online and offline services. The analysis incorporates variations in the number of consumer purchases and geographic locations. The study finds that increasing product prices while maintaining zero delivery fees consistently outperforms charging delivery fees while keeping prices constant in terms of their impact on retailers. Additionally, rarely-discussed aspects like starting delivery price and delivery range are also considered. Comparing parameter variations between the traditional retail model and the O2O instant delivery model leads to three primary conclusions. Firstly, the cost disparity between online and offline services significantly affects the optimal price and profit for the retailer. Secondly, when the cost of online service is slightly higher, setting a starting delivery price can enhance retailers’ profits compared to not having a starting price. Finally, the study outlines three strategies for implementing the O2O instant delivery model and suggests that defining a reasonable delivery range can help merchants reduce costs, improve delivery efficiency, and ultimately increase profits.

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“…The prominent businesses witnessing the growth of online platforms are transportation, ride-hailing, hospitality, online advertising and shared working spaces (Chen et al, 2020). The food and restaurant industry is also not far behind, with the introduction of online food delivery (OFD) platforms, which provide convenience to consumers by ensuring on-time deliveries while simultaneously offering a variety of food choices and easy checkout options (Du et al, 2023a;Shankar et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

“…, 2020). The food and restaurant industry is also not far behind, with the introduction of online food delivery (OFD) platforms, which provide convenience to consumers by ensuring on-time deliveries while simultaneously offering a variety of food choices and easy checkout options (Du et al. , 2023a; Seghezzi et al.…”

Section: Introductionmentioning

confidence: 99%

Fairness, profits and social welfare: the implications of pay-what-you-want in online food delivery

Shroff,

Shah,

Gajjar

2023

APJML

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PurposePay-what-you-want (PWYW) is a pricing strategy implemented in a variety of settings like supermarkets and museums, in which consumers determine the price they are willing to pay for a product or service based on their perceived utility. The authors propose an analytical model to investigate the impact of PWYW delivery pricing on the online food delivery (OFD) platforms.Design/methodology/approachUsing a game-theoretic model, the authors characterize the equilibrium as a function of the platform's average delivery cost and the consumer's social preferences parameters like fairness and reciprocity. The authors derive the parametric conditions under which PWYW generates higher profits for the platform compared to the traditional pay-as-asked delivery pricing.FindingsFor the PWYW strategy to be profitable, the average delivery cost to the platform should be low. Therefore, OFD platform managers should focus on reducing delivery costs. The authors also identify the feasible region in which the platform managers need to maintain the consumer's social preferences.Practical implicationsUnder PWYW, the authors recommend that the platform managers impose a minimum delivery fee which consumers can use as a benchmark to minimize zero delivery fee payments and consumers' free-riding tendencies simultaneously. This allows OFD platforms to extract online orders from highly price-conscious consumers.Originality/valueThis is one of the first studies to explore the innovative application of PWYW to a particular segment of delivery pricing in OFD platforms. The authors establish that the overall consumer surplus and social welfare are higher under the PWYW strategy, forming a solid ground for its implementation in OFD platforms.

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Implications of on-time delivery service with compensation for an online food delivery platform and a restaurant

Cited by 15 publications

References 34 publications

Group Buying Pricing Strategies of O2O Restaurants in Meituan Considering Service Levels

Group Buying Pricing Strategies of O2O Restaurants in Meituan Considering Service Levels

Optimal Strategies of the Online-to-Offline Instant Delivery Service of Grocery Retailers

Fairness, profits and social welfare: the implications of pay-what-you-want in online food delivery

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