Value-added service decision and coordination under fresh produce e-commerce considering order cancelation

Abstract

This paper proposes an analytic model under fresh produce e-commerce considering value-added service and order cancelation behavior. We first examine the optimal prices, value-added service decisions, and profits in the centralized and decentralized channels. Then, the revenue-cost-sharing contract is designed to eliminate the double marginal effect in the decentralized channel. The main findings are threefold. First, with the improvement of product quality, the optimal value-added service may increase and then decrease in both centralized and decentralized channels. Second, compared with the centralized channel, the decentralized channel prefers a lower retail price only when both salvage value coefficient and product quality are high. Besides, the proposed revenue-cost-sharing contract performs well in improving the value-added service and profits in the decentralized channel.