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      How should local Brick-and-Mortar retailers offer delivery service in a pandemic World? Self-building Vs. O2O platform

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          Abstract

          The Covid-19 pandemic has dramatically changed consumer purchase behavior, and the “stay-at-home order” policy has altered the operations of brick-and-mortar (B&M) retail stores. These changes have induced local B&M retailers to start online retailing with home delivery as an added option. B&M retailers can choose to offer online retailing on their own (referred to as self-building mode) or via a third-party online-to-offline (O2O) platform (referred to as platform mode). This paper investigates how the interplay between capacity, pricing, and online retailing mode is affected by the absence/presence of the pandemic. We characterize the equilibrium between the B&M retailer and the O2O platform provider. We find that the impact of the “stay-at-home orders” on B&M retailers differs by the online retailing mode. Interestingly, we find that the “stay-at-home orders” does not necessarily lower the B&M retailer’s profit if they engage in online retailing. Under self-building mode, the stay-at-home order leaves the B&M retailer with just the online channel. We identify the threshold delivery cost above (below) which the B&M retailer’s profit is lower (higher) than before. Under the platform mode, the “stay-at-home order” alters the retailer’s sales channel from dual channel to single channel, which mitigates the competition between the retailer and the O2O platform. The retailer’s profit increases if it has sufficiently high capacity. Finally, we extend the model to examine the effect of a “reopening policy” with a government subsidy. We find that although the subsidy improves the B&M retailer’s profitability, it may hurt the consumer surplus under some conditions. We suggest that governments take the B&M retailer’s capacity and operations mode into account when designing subsidy policies.

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          Most cited references38

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          Viable supply chain model: integrating agility, resilience and sustainability perspectives—lessons from and thinking beyond the COVID-19 pandemic

          Viability is the ability of a supply chain (SC) to maintain itself and survive in a changing environment through a redesign of structures and replanning of performance with long-term impacts. In this paper, we theorize a new notion—the viable supply chain (VSC). In our approach, viability is considered as an underlying SC property spanning three perspectives, i.e., agility, resilience, and sustainability. The principal ideas of the VSC model are adaptable structural SC designs for supply–demand allocations and, most importantly, establishment and control of adaptive mechanisms for transitions between the structural designs. Further, we demonstrate how the VSC components can be categorized across organizational, informational, process-functional, technological, and financial structures. Moreover, our study offers a VSC framework within an SC ecosystem. We discuss the relations between resilience and viability. Through the lens and guidance of dynamic systems theory, we illustrate the VSC model at the technical level. The VSC model can be of value for decision-makers to design SCs that can react adaptively to both positive changes (i.e., the agility angle) and be able to absorb negative disturbances, recover and survive during short-term disruptions and long-term, global shocks with societal and economical transformations (i.e., the resilience and sustainability angles). The VSC model can help firms in guiding their decisions on recovery and re-building of their SCs after global, long-term crises such as the COVID-19 pandemic. We emphasize that resilience is the central perspective in the VSC guaranteeing viability of the SCs of the future. Emerging directions in VSC research are discussed.
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            A decision support system for demand management in healthcare supply chains considering the epidemic outbreaks: A case study of coronavirus disease 2019 (COVID-19)

            Highlights • Developed a practical decision support system for COVID-19 healthcare supply chain. • Grouped people and provided an independent classification method for each group. • Evaluated the efficiency of the proposed approach using real-world data.
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              Agency Selling or Reselling? Channel Structures in Electronic Retailing

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                Author and article information

                Journal
                Transp Res E Logist Transp Rev
                Transp Res E Logist Transp Rev
                Transportation Research. Part E, Logistics and Transportation Review
                Elsevier Ltd.
                1366-5545
                1878-5794
                30 August 2021
                October 2021
                30 August 2021
                : 154
                : 102457
                Affiliations
                [a ]School of Economics and Business Administration, Chongqing University, Chongqing 400030, China
                [b ]Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, PA 15260, USA
                [c ]Chongqing Key Laboratory of Logistics at Chongqing University, Chongqing 400030, China
                Author notes
                [* ]Corresponding author.
                Article
                S1366-5545(21)00221-0 102457
                10.1016/j.tre.2021.102457
                8483890
                34611457
                06e91356-0398-4ba2-9879-181e5cc5b8a2
                © 2021 Elsevier Ltd. All rights reserved.

                Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.

                History
                : 20 December 2020
                : 14 August 2021
                : 16 August 2021
                Categories
                Article

                e-commerce,capacity,online retailing,pandemic,delivery service

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