Time: March 1st, 2019 (Friday) 13:30
Venue: Room 220, Building No.2, Songjiang Campus
Speaker: Wenjing Shen, Associate Professor, LeBow College of Business at Drexel University
Host: Chen jing
Topic: Fulfillment Service on Online Marketplaces
Fulfillment service at online marketplaces is gaining popularity recently. Dominant online retailers, such as Amazon.com and Sears.com, allow small retailers to sell on their online marketplaces and offer fulfillment service to handle the order fulfillment activities for small retailers. In exchange, small retailers pay a fulfillment fee per unit of sales. In this paper, we investigate the benefit of such fulfillment programs and study the optimal fulfillment fees for the dominant retailer. We consider two situations, depending on whether the two retailers engage in market competition. Our results suggest that fulfillment service can improve overall system efficiency, but may intensify competition. Without market competition it is always beneficial to offer fulfillment service due to system efficiency improvement and product valuation improvement, and both retailers may benefit from the program. When the two retailers compete, however, offering fulfillment program may not be worthwhile if the valuation improvement by fulfillment is at intermediate level. In addition, the benefit of fulfillment program can be completely extracted by the dominant retailer, unless the small retailer has private information on its own fulfillment cost.
Wenjing Shen is an Associate Professor at LeBow College of Business, Drexel University. Her research focuses on the interfaces of marketing and operations management and supply chain management. She uses analytical models to demonstrate the importance of taking consumer reactions into consideration while making supply chain decisions. Her research has been published in Management Science, Manufacturing & Service Operations Management, Omega, Computers and Operations Research, among others. She currently serves as the editorial board member for Production and Operations Management, book review editor for Interfaces, and associate editor for Omega.