Pricing for perishable goods in advance selling strategy

Perishable goods are those whose value decay rapidly over time. To reach the maximum profit, vendors should sell them as soon as possible ever since they are available on market. Advance selling strategy refers to sell a product before it is ready for sale and this helps sellers to observe the market response and adjust its operational plans. With the rapid development of E-commerce, it becomes much easier and cheaper for both sellers and buyers to search for desired information. Advance selling has become an effective and popular sales strategy for perishable goods selling. In this paper, we aim to develop a pricing model for perishable goods in the context of advance selling. Consumers are classified to two categories based on the shopping habit, namely strategic consumer and conventional consumer. The whole sales process is divided into two stages, which are advance selling stage and normal sales stage. A pricing model is proposed in advance selling strategy to achieve maximum profit for the seller in this paper. The best pricing of two phases can be obtained when the market reaches equilibrium. Numerical computation and sensitive analysis are conducted in the end of this paper. The results show that the best prices grow with the demand and depend on the ratio between the quantities of potential consumer for the two sales stages.