Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery
Abstract
:1. Introduction
2. Literature Review
2.1. The CFS Policy
2.2. Demand Postponement Strategy
2.3. Firms’ Operational Decisions during Price Promotions
3. Model
3.1. Notations and Assumptions
3.2. The Basic Model
3.2.1. Consumer’s Purchasing Decision
3.2.2. Online Retailer’s Decision
3.3. The Developed Model with Delayed Delivery
3.3.1. Consumer’s Purchasing Decision
3.3.2. Online Retailer’s Decision
4. Numerical Example
4.1. Numerical Results
4.2. Sensitivity Analysis
4.2.1. The Impact of T
4.2.2. The Impact of C
4.2.3. The Impact of
4.2.4. The Impact of
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Notations | |
---|---|
m | The online retailer’s profit margin |
C | The shipping fee of the unit order |
T | The length of the delivery delay time |
a | Potential market size |
Consumer sensitivity to the shipping fee | |
Consumer sensitivity to CFS threshold | |
The demand for consumer orders in the basic model | |
The demand for consumer orders in the developed model | |
The consumer’s planned purchase amount (in dollars), which follows the uniform distribution | |
v | Consumer’s marginal utility when the real purchase amount is less than the planned purchase amount, |
d | Consumer’s marginal utility when the real purchase amount is not less than the planned purchase amount, |
Indicator of consumers’ negative attitude toward the shipping fee, | |
Indicator of consumers’ negative attitude toward the delayed delivery time, which follows the uniform distribution | |
k | The discount on the shipping fee for the delayed delivery |
R | The total shipping fees |
E | The total expected revenues |
The online retailer’s total expected profit | |
Subscript | |
n | The shipping-fee-sensitive consumer |
s | The on-time delivery required consumer |
Decision variables | |
x | Consumer’s real purchase amount (in dollars) |
The high CFS threshold value | |
The low CFS threshold value |
CFS Threshold | Demand | The Expected Profit | |
---|---|---|---|
The basic model | |||
The developed model |
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Ma, X.; Bian, W.; Yang, X.; Niu, S.; Cai, Y.; Guan, J.; Wang, W. Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery. Sustainability 2022, 14, 10773. https://doi.org/10.3390/su141710773
Ma X, Bian W, Yang X, Niu S, Cai Y, Guan J, Wang W. Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery. Sustainability. 2022; 14(17):10773. https://doi.org/10.3390/su141710773
Chicago/Turabian StyleMa, Xiaxia, Wenliang Bian, Xiqing Yang, Shengnan Niu, Yongming Cai, Jie Guan, and Wenbin Wang. 2022. "Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery" Sustainability 14, no. 17: 10773. https://doi.org/10.3390/su141710773