Purpose

We examine a key question that online retailers are facing: In which case should they offer free shipping policy instead of calculated shipping policy?

Design/methodology

The problem is formulated as a Stackelberg game where two competing retailers purchase from a single supplier. Furthermore, we use numerical simulation to analyse the consumer and social welfare with different shipping policies.

Novelty

The main contribution of this work is that the positive and negative effects of different shipping policies are considered into a customer’s utility function, where the customer is loss averse.

Findings

(a) The free shipping policy is optimal for low-priced retailers and the calculated shipping policy is optimal for high-priced retailers. (b) The equilibrium shipping strategies are Pareto-optimal for all players in the supply chain. (c) In equilibrium, customers cannot achieve the highest consumer welfare, but the society can reach the highest social welfare.

Implications

When deciding which shipping policy to adopt, managers should consider the different sensitivities of customers to the shipping fee when buying high-priced products and low-priced products. Moreover, it is beneficial for the entire supply chain to have the retailers who are in direct contact with customers to determine the shipping strategies.

中文翻译：

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零售竞争中的最优运输政策及其对客户的影响

目的

我们研究了在线零售商面临的一个关键问题：在哪种情况下，他们应该提供免费送货政策而不是按计划的送货政策？

设计/方法

该问题被表述为Stackelberg游戏，其中两个竞争的零售商从一个供应商处购买。此外，我们使用数值模拟来分析不同运输政策下的消费者和社会福利。

新颖性

这项工作的主要贡献在于，将不同的运输策略的正面和负面影响都考虑到了客户的效用函数中，在该函数中，客户避免了损失。

发现

（a）免费送货政策最适合低价零售商，计算得出的送货政策最适合高价零售商。（b）对于供应链中的所有参与者，均衡运输策略都是帕累托最优的。（c）在均衡状态下，客户无法获得最高的消费者福利，但是社会可以达到最高的社会福利。

含义

在决定采用哪种运输政策时，管理人员在购买高价产品和低价产品时应考虑客户对运费的不同敏感性。而且，使整个供应链具有与客户直接接触以确定零售商的运输策略的零售商是有益的。