276 / 2024-04-23 23:52:09

Committed Shipment-Time Decision in Online Retail: A Model Responding to Consumer Behavior of Purchasing from Multiple Sellers

Committed shipment time,Simultaneous purchasing behavior,Revenue-maximization model

Online retailers commonly attract consumers by offering short committed shipment times (CST), despite the uncertainty in actual shipment times. This study examines the behavior of consumers who, sensitive to shipment delays, chose to purchase from multiple e-shops to overcome delivery uncertainties, as seen from medical devices during pandemics or decorations for emergency events. These products are standard low-value consumables with strong substitutability. By constructing an appropriate average utility function to characterize the situation of consumers purchasing simultaneously, we develop a retailer revenue-maximization model to explore how this purchasing pattern affects optimal CST settings and retailer revenue, contrasting these findings with traditional single-source purchasing contexts. Our analysis finds that consumers are more likely to diversify their shopping sources when neither of the CSTs faced by consumers is set to be particularly large. Additionally, we assess how retailers can improve their profits by adjusting CSTs to meet consumer expectations of timeliness and reliability. The results indicate that fine-tuning CSTs can significantly increase retailer revenue under specific conditions, while in other situations, maintaining the status quo may be more beneficial.