Operation Models in O2O Supply Chain When Existing Competitive Service Level

Abstract

O2O (Online to Offline) business model, a kind of new business model between online and offline channel, is put forward by some innovative enterprises. Supply chain decision under O2O business model completely changes price competition in traditional dual-channel supply chains. Operation strategies in O2O supply chains such as price discrimination and service free-riding have become important issues. When there exists different service level in O2O supply chain, the corresponding parameters such as retail price, sales quantity, service level and total supply chain profit in three supply chain channels (vertical manufacturer's O2O supply chain, horizontal retailer's O2O supply chain and partially vertical manufacturer's O2O supply chain) are obtained and the corresponding performances are compared. The results show that the total supply chain profit in the vertical manufacturer's O2O supply chain is highest and the service level in the partially vertical manufacturer's O2O supply chain is highest. When there exists service competition in those three supply chains, the total supply chain profit in the horizontal retailer's O2O supply chain is larger than that in the partially vertical manufacturer's O2O supply chain. When there exists service free-riding, the total supply chain profit in the partially vertical manufacturer's O2O supply chain is larger than that in the horizontal retailer's O2O supply chain.