How Does a Retailer Improve Profit Under Advance Selling Strategy?

DOI

10.2991/aebmr.k.201211.130How to use a DOI?

Keywords

Supply chain, advance selling, wholesale contract, agency contract

Abstract

This paper investigates how a retailer in a supply chain improves advance selling profit by offering agency contract instead of wholesale contract. We propose a two-period advance selling model under the wholesale contract as the benchmark model. We assume that consumers are homogeneous in the advance period and heterogeneous in the spot period whose valuations are uniformly distributed. The results show that the advance selling option under the wholesale contract hurts the retailer’s profit under some circumstances. We then construct a model where the retailer offers agency contract to the manufacturer. We show that, under the agency contract the retailer’s profit can be improved to some extents depending on the range of the marginal cost, the commission rate and the consumer valuation dispersion. Numerical examples are provided to illustrate the main results. Our research can explain why online platform retailers, who apply advance selling strategy, prefer to provide agency contract to manufacturers.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - Lan Feng
AU  - Puze Yu
AU  - Hui Yang
AU  - Chen Jin
PY  - 2020
DA  - 2020/12/14
TI  - How Does a Retailer Improve Profit Under Advance Selling Strategy?
BT  - Proceedings of the Fifth International Conference on Economic and Business Management (FEBM 2020)
PB  - Atlantis Press
SP  - 745
EP  - 750
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201211.130
DO  - 10.2991/aebmr.k.201211.130
ID  - Feng2020
ER  -