O2O dual-channel sales: Choices of pricing policy and delivery mode for a restaurant

Du, Zhong; Fan, Zhi‐Ping; Sun, Fenghao

doi:10.1016/j.ijpe.2022.108766

Cited by 19 publications

(7 citation statements)

References 30 publications

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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%

See 1 more Smart Citation

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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Section: Literature Reviewmentioning

confidence: 99%

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

View full text Add to dashboard Cite

show abstract

“…Guo et al [40] studied the impact of online ordering and in-store dining strategies on restaurant optimal decision-making and maximum profit; they found that when the unit carbon tax price is relatively high, using this strategy can reduce carbon tax costs. Du et al [41] discussed four combinations of the pricing strategies (online and offline unified pricing and differential pricing) and delivery modes (self-distribution and platform distribution) of restaurants. By comparing the profits in four scenarios, the restaurant can choose the appropriate strategy.…”

Section: O2o Supply Chain Pricing Strategiesmentioning

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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“…The OFD platform's revenue mainly comprises two streams: a) commissions collected from the restaurant and b) the delivery fees charged to the consumers (Du et al, 2023b;Tong et al, 2020). The tie-ups between the restaurants and the platform are forged through the commission contract, which entitles the OFD platform to a fixed commission per online order (Niu et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

“…The OFD platform's revenue mainly comprises two streams: a) commissions collected from the restaurant and b) the delivery fees charged to the consumers (Du et al. , 2023b; Tong 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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O2O dual-channel sales: Choices of pricing policy and delivery mode for a restaurant

Cited by 19 publications

References 30 publications

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

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

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

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

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