How Does a Retailer Improve Profit Under Advance Selling Strategy?
- 10.2991/aebmr.k.201211.130How to use a DOI?
- Supply chain, advance selling, wholesale contract, agency contract
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.
- © 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/).
Cite this article
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 -