O2O results in traffic congestion reduction and sustainability improvement: Analysis of “Online-to-Store” channel and uniform pricing strategy

This paper examines the effects of two O2O business models, (1) the uniform pricing and (2) the online-to-store channel, on traffic congestion control. We show that uniform pricing always reduces the online demand size and increases the retail price if the online logistics cost is low. Therefore, it can be a win-win-win solution for channel coordination, traffic congestion reduction and supply chain sustainability improvement. We also show that, an online-to-store channel might result in a high retail price and low online demand size, which benefits the retailer when the logistics cost is high.

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