Platformization and two-sided pricing strategies for retailers
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    Abstract:

    Turning to the theoretical methods of two-sided markets,this article studies the platformization of traditional retailers as well as the two-sided pricing modes for platforms. The main results indicate that the transition from a traditional retailer with price difference mode to one with slotting allowance does not result in a higher profit but that the transition to the platform mode with membership fees does result in a lower profit.Further,as the unit distribution cost increases,the platform with commission mode may be a desirable transitional alternative for a traditional retailer; as the unit distribution cost amounts to a high level,the platform with two-part tariffs mode will be more desirable and it shall raise the commission ratio for suppliers but support them with a subsidy.Customers should be entertained with free of charge in this occasion.Lastly,the highly skewed pricing strategies for the platform with membership fees mode depend on the retail prices and the distribution costs.The optimal strategies for the platformized retailer indicate that both consumers and suppliers should be tared if the retail prices are set at a medium level by suppliers and that the suppliers should be changed while subsidizing customers if the retail prices set by suppliers are high enough. Besides,this article carries out applied investigations on the pricing modes for B2C retailers in China.

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  • Online: April 17,2018
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