Minimum Advertised Price

This paper examines minimum advertised price (MAP), a vertical restraint that is observed in manufacturer-retailer interactions. Under MAP, the manufacturer announces that it will reimburse retailers for a fraction of their advertising expenditures if retailers do not advertise the product at below a specified price. MAP can be considered a combination of resale price maintenance (RPM) and a cooperative advertising subsidy. Current antitrust law treats RPM as illegal per se, whereas MAP is judged according to a rule of reason. A framework is presented within with neither a minimum retail price nor a cooperative advertising subsidy is individually sufficient to enable maximization of profits in the complete manufacturer-retailer structure, but the two instruments together are. MAP is therefore a sufficient instrument for the maximization of joint profits. We argue that MAP can also be designed as a second-best instrument that replicates RPM.     

Sales by multi‐product retailers

This paper examines the rationale underlying periodic price promotions, or sales, for perishable food products by supermarket retailers. Whereas previous studies explain sales in a single‐product context as arising from informational, storage cost, or demand heterogeneity, this study focuses on the central role of retailers as multi‐product sellers of complementary goods. By offering a larger number of discounted products within a particular category, retailers are able to attract a sufficient number of customers to offset the effect of lower margins on sale items by selling more high‐margin items. The implications that emerge from the resulting mixed‐strategy equilibrium are tested in a product‐level, retail‐scanner data set of fresh fruit sales. Hypotheses regarding the rationale and effectiveness of sales are tested by estimating econometric models that describe (1) the number of sales items per store, (2) the depth of a given sale, and (3) promotion effectiveness on store‐level demand. The results of this econometric analysis support the hypothesis that the breadth and depth of price promotions are complementary marketing tools, thus explaining how EDLP and HI‐LO store formats can exist in the same monopolistically competitive market equilibrium. Copyright © 2006 John Wiley & Sons, Ltd.     

The role of physical distribution services as determinants of product returns in Internet retailing

Pressure continues to build on Internet retailers to squeeze out inefficiencies from their day-to-day operations. One major source of such inefficiencies is product returns. Indeed, product returns in Internet retailing have been shown to be, on average, as high as 22% of sales. Yet, most retailers accept them as a necessary cost of doing business. This is not surprising since many retailers do not have a clear understanding of the causes of product returns. While it is known that return policies of retailers, along with product attributes, are two important factors related to product return incidents, little is known about which aspects of the online retail transaction make such a purchase more return-prone. In the current study, we seek to address this issue. We use a large data set of customer purchases and returns to identify how process attributes in physical distribution service (PDS) influence product returns. The first attribute involves perceptions of scarcity conditions in inventory availability among consumers when retailers reveal to consumers information on inventory levels for the products that they intend to buy. Our results show that orders in which items are sold when these conditions are revealed to shoppers have a higher likelihood of being returned than orders in which these conditions are not revealed. While prior research has argued that inventory scarcity perceptions have an effect on purchases, our findings suggest that they are also related to the likelihood of these purchases being returned. The second attribute involves the reliability in the delivery of orders to consumers. We find that the likelihood of orders being returned depends on the consistency between retailer promises of timeliness in the delivery of orders and the actual delivery performance of the orders. Moreover, we find that the effect that consistency in the delivery has in the likelihood of returns, is stronger for orders that involve promises for expedited delivery than for orders with less expeditious promises. That is, although the occurrence of returns depends on the delays in the delivery of orders to consumers relative to the initial promises made by the retailers, this effect is more notable for orders that involve promises of fast delivery.     

具有模糊—随机性的易腐货品最优补货策略

结合易腐物品的变质特点,考虑不确定环境下配送中心以固定周期为连锁门店送货、连锁商单位时间需求为模糊变量的分销系统,通过利用三参数Weibull函数来描述易腐货品的变质特性,运用可信性理论的逆模糊化和随机理论,建立了模糊-随机下的每周期易腐货品的最优补货策略模型。借助MATLAB得到了求解最优补货策略的方法,并通过仿真模拟验证了方法的合理性。     

Product Differentiation by Competing Vertical Hierarchies

We revisit the choice of product differentiation in the Hotelling model, by assuming that competing firms are vertically separated, and that retailers choose products' characteristics. The “principle of differentiation” does not hold because retailers with private information about their marginal costs produce less differentiated products in order to increase their information rents. Hence, information asymmetry within vertical hierarchies may increase social welfare by inducing them to sell products that appeal to a larger number of consumers. We show that the socially optimal level of transparency between manufacturers and retailers depends on the weight assigned to consumers' surplus and trades off two effects: higher transparency reduces price distortion but induces retailers to produce excessively similar products.     

Advance selling of new products to strategic consumers on flash sale platforms*

Flash sale (FS) is a new business model that offers discounted products in limited numbers over a short period. In this paper we discuss the impact of strategic consumers on advance selling (AS) of new products on FS platforms. We first study the impact of strategic consumers on competing retailers adopting AS to sell a homogeneous new product. And find that the retailers’ AS profits and inventory quantities decrease with the strategic customers’ valuation and valuation decreasing rate. Then we analyse whether FS can mitigate the impact of strategic customers on retailers adopting AS for new products. We consider a newsvendor model involving only one retailer adopting AS to sell a new product. We derive the results by comparing this model with two counterpart models, namely the classical newsvendor model with no strategic customers and a newsvendor model with strategic customers where the retailer does not use FS under AS.     

基于移动智能终端的VMI支持系统设计与实现

VMI研究往往忽略掉了小型零售商。小型零售商的库存管理杂乱无序,不利于全社会的库存成本降低,不利于商品的快速周转。一种面向小型零售商的VMI模型,通过引入第三方物流商(TPL),由TPL来担当供货商与零售商的粘合剂,为后二者提供一种灵活架构与操作的VMI支持系统。设计了一种C/S、B/S混合的网络体系结构系统,讨论了三方在VMI模式的主要功能需求,研究了一种担当POS系统的、基于Windows CE技术的移动智能终端,并介绍了跨平台、跨网络的Web Service技术应用方案。基于VS.NET实际开发与实验表明,这种系统是可行的,可有效支持面向小型的零售商、供货商与TPL的VMI模型的实现。     

How much do online consumers really value free product returns? Evidence from eBay

Consumer return rates have been steadily rising in recent years, resulting in growing costs for retailers who must manage the returns process and the disposition of returned products. This cost pressure is driven in part by extremely generous return policies, such as giving consumers a full refund upon return. Interestingly, this common retail practice of full refunds is inconsistent with the recommendations of many analytical models of returns, which nearly always show that a partial refund is optimal. Such inconsistencies between theory and practice might arise when the decision drivers included in the analytical models do not match the decision drivers in practice. It might also be the case that retailers are overly optimistic about the value that consumers assign to a full refund, and thus assume that the value of such a policy outweighs its costs. In this paper, we use data collected from eBay, where identical products are sold with different return policies, to investigate these open questions in the literature. We analyze both the return policy drivers from the retailer's perspective and the return policy value from the consumer's perspective. Our results suggest that the value of a full refund policy to consumers may not be as large as one might expect, and it also exhibits a large heterogeneity across buyers with different levels of online purchase experience. In addition, we provide empirical evidence for what has long been suspected by online retailers – that a non-refundable forward shipping charge quickly erodes any value that consumers assign to return policies. The generality of our results is limited by the fact that eBay differs from traditional retail contexts in many respects, including the fact that eBay buyers may not be representative of the general buyer population. However, our study of how eBay consumers value free returns provides new insights into an understudied area, and it can serve as a starting point for future studies of the value of return policies in other retail contexts.     

The impact of corporate social responsibility associations on trust in organic products marketed by mainstream retailers: a study of Italian consumers

This paper investigates the determinants of consumer attitudes toward organic products marketed by mainstream retailers under a private label. Since organic products are credence goods, consumers cannot directly verify whether these products comply with official standards. Organic labels are the primary source of consumer trust in organics, but these labels must be noticed and understood before consumers will actively seek them out. In that some consumers may not prioritize product labels when they shop, it is sometimes up to retailers to strengthen consumer trust. Within the antecedents of this trust, we isolated the contribution of the corporate social responsibility associations held by consumers about retailers. We surveyed Italian customers interested in organics and found that they are more likely to trust the private‐label organic products sold by a retailer when it is considered socially responsible. Our results also show that consumer trust translates into brand loyalty and a willingness to pay a premium price for organic products. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Measuring Retailers' Sustainable Development

This study aimed to develop a framework and measurement items for retailers to assess sustainability while avoiding potential subjectivity by combining top‐down and bottom‐up approaches, and verifying their validity based on consumer perceptions of sustainable retailing. The framework consisted of 54 measurement items categorized into a three‐order hierarchical model. At the top level of the model, there were three third‐order dimensions respectively related to consumers, retailers, and society. At the middle level, eight second‐order sub‐dimensions associated with retailing mix were classified into the aforementioned third‐order dimensions. At the bottom level, there were 21 first‐order sub‐dimensions related to the sustainable retailing activities. The development of sustainability assessment by combining top‐down and bottom‐up approaches and including consumer perceptions will allow retailers to assess their sustainability more strategically, as it will reduce the subjectivity and increase consumers' recognition of sustainable retailing. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

A model of vertical integration and investment in generation capacity in electricity markets: The case of the bidding game

The aim of this work is to assess the impact of (partial) vertical integration between generators and retailers on generation capacity choice and its subsequent welfare consequences. We present a framework in which final demand is perfectly inelastic and stochastic. Nevertheless, wholesale demand is elastic because of the existence of outside opportunities (mainly international transmission capacity). The model is a three-stage game. Neither transmission nor retail costs are taken into account.

In the first stage of the game, generators choose capacity only knowing distribution of demand and thus maximizing their expected profit. The second stage of the game represents the competition for market share between retailers in a market where consumers have switching costs. The former face unknown demand and maximize their utility based on two factors: the expected profit and a risk element. Finally, generators submit bid functions to the system operator given known demand and maximizing their profit during the last stage of the game. Retailers and generators interact in the wholesale market, which is cleared by the system operator whose function is to match supply (represented by the bids of the generators) and demand through a system of single price auctions. The wholesale market is the only means to buy and sell energy; there are no bilateral contracts between firms, except if they are vertically integrated.

We compare fully disintegrated and partially vertically integrated structures using a comparative statics approach. In this paper, the analysis will focus on the last stage of the game: the bidding game. We find that partial vertical integration between generators and retailers tends to lower wholesale prices but not unambiguously. Depending on which firm (vertically integrated or disintegrated generator) has installed the higher capacity and depending on level of demand, prices can stay unchanged or even rise.     

供应商为主导的两种市场下经销商的订购问题研究

随着电子商务市场的迅速发展,越来越多的企业加入电子商务市场。电子商务市场中的批发价格比传统市场更优惠,因此吸引了众多经销商的加入。但是在电子商务市场中不存在不良品和积压品的回购活动．所以经销商也需要考虑电子商务市场是不是自己更好的选择。文章分别对传统市场和电子商务市场进行分析,以期让经销商获得利益的最大化。     

供应商为主导的两种市场下经销商的订购问题研究

随着电子商务市场的迅速发展,越来越多的企业加入电子商务市场。电子商务市场中的批发价格比传统市场更优惠,因此吸引了众多经销商的加入。但是在电子商务市场中不存在不良品和积压品的回购活动,所以经销商也需要考虑电子商务市场是不是自己更好的选择。文章分别对传统市场和电子商务市场进行分析,以期让经销商获得利益的最大化。     

Unlimited shelf space in Internet supply chains: Treasure trove or wasteland?

Internet retailing offers merchants limitless shelf space. This has led experts to highlight the existence of a “long tail” of offerings on the web and assert that the future of online business is “selling less of more.” However, it is difficult for Internet retailers of physical goods to sell a large scope of products without having to handle potentially large amounts of product returns from customers. This is due to the fact that customers can and do get overwhelmed by excessive product variety and often make erroneous purchasing decisions. We shed light on this issue through an assessment of theoretical predictions based on data from sales and returns of almost 7000 products in a particular product category. While retailers can benefit from expanding the scope of their inventories to generate Internet sales, the success of this strategy will depend on the control of unjustified product returns by consumers and the management of recurrent execution errors and product fit failures in transactions with customers. Furthermore, from our results, the gains that this strategy will bring to retailers will be bound by the amount of time products have been available on the Internet retailer's site, as well as by other attributes such as product price and size.     

Sustainable Tuna – Can the Marketplace Improve Fishery Management?

Tuna is a major global seafood commodity and thus of significance to retailers in most countries, but especially in countries consuming large quantities of canned tuna such as the United Kingdom, United States and many European countries. Some key species are under heavy fishing pressure, and companies realize that without conservation oriented management their future supplies may be in jeopardy. Sustainable sourcing policies are becoming an integral part of supply chains for seafood products. Under the influence of public opinion bodies such as the media and environmental NGOs, many retailers have adopted seafood sourcing policies in the past decade. The business strategy of any particular company in seeking to support sustainable fishing can vary, but may include the pursuit of market opportunities, protection from damaging publicity and corporate social responsibility commitments. Companies that seek to involve themselves in fishery sustainability issues need to be committed to broad based partnerships with other companies and NGOs, and transparency about all aspects of their decision making, intentions and progress. The sustainable seafood movement has proven persistent and adaptable, and this is increasing the number of retailers seeking sustainable tuna. In a demand driven market economy this growth will surely be influential. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

Retailers’ incentives for green investment in differentiated competition channels

With increasing public environmental awareness, green activities in retail and distribution processes have become crucial tools for retailers to boost demand and enhance competitiveness. This study develops an analytical model to study the green investment choices of two differentiated retailers dealing with a common green manufacturer. It also explores the impacts of these investment choices on the manufacturer's operational decisions, channel efficiency, consumer welfare, and the environment. We derive three main results. First, the powerful retailer always favors green investments, whereas the less powerful (inferior) retailer may either prefer or avoid green investments. The fiercer the inter-retailer competition, the lower the willingness of the inferior retailer to introduce green investments. Second, although all supply chain parties may disagree on their preferences for retailers' green investments, a bilateral green investment (i.e., both retailers make green investments) can reach an incentive alignment for all firms if the differentiation between retailers is low enough and the competition between them is not substantially fierce. Moreover, a bilateral green investment improves consumer welfare and channel efficiency because of the great demand expansion and double marginalization reduction. Third, the retailers' green investments can motivate the manufacturer to produce greener products, but they do not necessarily benefit the environment. We show that the supply chain's economic sustainability aligns with its environmental sustainability only if the environmental improvement efficiency of green investments is substantially high. We further examine the impact of retailers with differentiated green investment abilities and the manufacturer's green investment efficiency to verify the robustness of the main results.     

The demand for retailer-financed instalment credit: An econometric analysis

During the mid- to late 1980s the UK's Chancellor of the Exchequer has attempted to reduce the volume of consumer credit extended by increasing interest rates rather than by re-introducing terms controls. This paper presents estimates of demand functions for new credit extended by retailers which was financed by them and repaid by instalments. Following earlier papers, a stock-adjustment model is presented that is extended to allow for credit rationing. The results suggest that the demand for such new credit extended is related negatively to terms control and positively to personal disposable income and expectations. Demand was not found to be related to (a proxy for) the nominal interest rate charged by retailers (although it was found to be positively related to the real rate). The former finding is consistent with questionnaire evidence that consumers are unaware of the interest rate that they pay for credit. Elasticities of demand are presented.     

Price promotions as a threat to brands

Manufacturers frequently resist heavy discounting of their products by retailers. Since low prices should increase demand and manufacturers could simply refuse to fund deep price promotions, such resistance is puzzling at first sight. We develop a model in which price promotions cause shoppers to evaluate the relative importance of quality and price against a market-wide reference point. With deep discounting, consumers perceive quality differences as less pronounced, eroding brand value and the bargaining position of brand manufacturers. This reduces their profits and may even lead to a delisting of their products. By linking price promotions to increased one-stop shopping and more intense retail competition, our theory also offers an explanation for the rise of store brands.     

基于信用期销售策略下的易损物品采购和定价研究

以零售商最大化收益为目标,结合分析易损物品的特性,拓展带价格弹性的Jaggi分析模型,探讨零售商采购、定价策略,并进一步以数学模拟的方法分析了损耗系数、价格弹性对订货周期、定价以及零售商收益的影响,揭示了零售商对易损物品的采购策略。     

Direct Marketing in Oligopoly

We consider a game in which symmetric manufacturers decide whether to set up sites (e.g., web sites) where consumers can buy their products directly. Following this decision, the manufacturers choose quantities to sell to the retailers, and then the manufacturers with direct‐sales sites and retailers choose quantities to sell to the consumers. We show that since an increase in the number of retailers may drive the direct‐selling manufacturers from the retail market, it may raise the retailers’ profit and reduce social welfare. Finally, we discuss two cases: an oligopolistic wholesale market and a market with price competition and differentiated products.