Pricing strategies in B2C electronic commerce: analytical and empirical approaches

Shan, Chun; Kim, Jae-Cheol

doi:10.1016/j.dss.2004.04.012

Cited by 71 publications

(32 citation statements)

References 15 publications

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“…The total number of consumers in a market is denoted as η 0 and each consumer buys at most one unit of goods. Following prior study (Chun and Kim 2005;Fan et al 2007Fan et al -2008Fan et al 2009), we assume that consumers have homogenous valuation of V for the good. While the setting is mainly for analytical convenience, it can be applied to some commodities on which the heterogeneity of individual valuation is not significant.…”

Section: The Modelmentioning

confidence: 99%

Analysis of pricing strategies for community-based group buying: The impact of competition and waiting cost

Jhang-Li

Hwang

et al. 2010

Inf Syst Front

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Group buying is one of the major pricing mechanisms in which retailers can offer low group rates due to a saving on transaction costs and its target consumers are those with lower sensitivity on waiting time. Under group buying, group size significantly affects the waiting cost to which consumers have different tolerances. In this paper, we develop a two-stage pricing game to evaluate the impact of the waiting cost, competition, and group-facilitating technology on the profitability and efficiency of community-based group buying. Our results point out that when a monopolistic retailer operates a mixed channel, the retailer will charge a relatively high group rates in the group-buying channel to force most consumers to choose individual buying unless the transaction cost in the individual-buying channel is sufficiently high. If two competing retailers adopt different pure channels, investment in group-facilitating technology may weaken the profit of the retailer adopting community-based group buying when the actual sellingcost saving resulted from community-based group buying is not significant.

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Section: The Modelmentioning

confidence: 99%

Analysis of pricing strategies for community-based group buying: The impact of competition and waiting cost

Jhang-Li

Hwang

et al. 2010

Inf Syst Front

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“…First, and most importantly, we provide empirical support for assumptions widely used in theoretical models of online-offline channel substitution (Balasubramanian 1998, Pan et al 2002, Jeffers and Nault 2007, Viswanathan 2005, Chun and Kim 2005, Liu et al 2006, Moorthy and Zhang 2007, Guo and Liu 2008, Cheng and Nault 2007. By providing evidence for the importance of transportation costs and online disutility costs and shedding light on their relative magnitudes, we provide further insights into results in these papers that often depend on these parameter values.…”

Section: Introductionmentioning

confidence: 94%

“…In particular, our paper is closely related to research on multichannel retailing that utilizes theoretical models of spatially differentiated commodity markets derived from Salop's (1979) circular city model (Balasubramanian 1998, Jeffers and Nault 2007, Viswanathan 2005, Cheng and Nault 2007, Guo and Liu 2008 and from Hotelling's (1929) linear city model (Pan et al 2002, Chun and Kim 2005, Liu et al 2006, Moorthy and Zhang 2007. Common assumptions in all of these models are the presence of INFORMS holds copyright to this article and distributed this copy as a courtesy to the author(s).…”

Section: Hypothesesmentioning

confidence: 99%

Competition between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live

2007

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O ur paper shows that the parameters in existing theoretical models of channel substitution such as offline transportation cost, online disutility cost, and the prices of online and offline retailers interact to determine consumer choice of channels. In this way, our results provide empirical support for many such models. In particular, we empirically examine the trade-off between the benefits of buying online and the benefits of buying in a local retail store. How does a consumer's physical location shape the relative benefits of buying from the online world? We explore this problem using data from Amazon.com on the top-selling books for 1,497 unique locations in the United States for 10 months ending in January 2006. We show that when a store opens locally, people substitute away from online purchasing, even controlling for product-specific preferences by location. These estimates are economically large, suggesting that the disutility costs of purchasing online are substantial and that offline transportation costs matter. We also show that offline entry decreases consumers' sensitivity to online price discounts. However, we find no consistent evidence that the breadth of the product line at a local retail store affects purchases.

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“…The research of Chiang et al [11] indicate that manufacturer and retailer who act independently will create a higher retail price, lower sales, and lower profits without a direct channel and the vertically integrated direct channel allows manufacturer to constrain the pricing behavior of retailer. Chun et al [12] analyze why there are price differences between a conventional retail channel and a direct online channel. Li et al [13] show that in the markets where retail price consistency across channels is mandatory, an incumbent traditional brickand-mortar retailer can deter the entry of a pure-play online retailer by strategically refraining from entering online.…”

Section: Literature Reviewmentioning

confidence: 99%

Price competition and equilibrium analysis in multiple hybrid channel supply chain

Guihua

Ai-hu

Jiang

2017

IOP Conf. Ser.: Mater. Sci. Eng.

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Abstract. The amazing boom of Internet and logistics industry prompts more and more enterprises to sell commodity through multiple channels. Such market conditions make the participants of multiple hybrid channel supply chain compete each other in traditional and direct channel at the same time. This paper builds a two-echelon supply chain model with a single manufacturer and a single retailer who both can choose different channel or channel combination for their own sales, then, discusses the price competition and calculates the equilibrium price under different sales channel selection combinations. Our analysis shows that no matter the manufacturer and retailer choose same or different channel price to compete, the equilibrium price does not necessarily exist the equilibrium price in the multiple hybrid channel supply chain and wholesale price change is not always able to coordinate supply chain completely. We also present the sufficient and necessary conditions for the existence of equilibrium price and coordination wholesale price. IntroductionWith the rapid development of information technology, human way of life and work has been changed completely. Using Internet, consumers can search, compare and get plenty of information about the goods they want to buy conveniently and economically without restrictions of time, space, weather, etc. On the other hand, the improvement in the efficiency of merchandise delivery provided by the third-party logistics enterprises such as Federal Express and UPS makes merchants have the ability to deliver their products to customers quickly but not costly. The combination of traditional business model with information technology and logistics industry promotes the emergence and development of e-commerce and makes it no longer be a novelty.The shortening of the length and the reduction of the intermediate links number of supply chain caused by online shopping reduce the price of products and benefit the customers. Meanwhile direct sale online makes enterprises more close to their customers and can obtain more accurate information for production operations management. Sale and purchasing through network became more and more popular and changed both enterprises' sales model and consumers' consumption patterns significantly. When electronic channel has become a critical selling and buying channel, manufacturers who sold only with the help of traditional retailers began to sell products to end customers directly via Internet. Such as IBM, Hewlett-Packard, Nike, Pioneer Electronics, Mattel, Estee Lauder and Cisco Systems, many prominent manufacturers had adopted primarily direct marketing techniques to sell their

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Pricing strategies in B2C electronic commerce: analytical and empirical approaches

Cited by 71 publications

References 15 publications

Analysis of pricing strategies for community-based group buying: The impact of competition and waiting cost

Analysis of pricing strategies for community-based group buying: The impact of competition and waiting cost

Competition between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live

Price competition and equilibrium analysis in multiple hybrid channel supply chain

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