Research On Pricing Strategy Of Online-retailer Under Different Wholesale Price Strategy

The continuous development and popularization of the internet has greatly changedpeople’s daily life and gives birth to new things and industries, and online shopping isone of these products. The springing up of online shopping makes online retailersbecome the new participants of the economy. In general, online retailers should fix twoproblems in their business: firstly, inventory. They face three choices: holding stockthemselves, cooperating with the third parties to meet the order or totally rely on thethird parties; secondly, how to price their products to maximize their profit and this iswhat we discuss in this paper.The object of this paper is an online-retailer who sales the same seasonal productsas a store, he has no inventory and relies on the store who has inventory to meet theorders. When the store takes static wholesale price strategy (price is not change withinventory levels and the remaining sales time) and dynamic wholesale price strategy(price changes with inventory levels and the remaining sales time), how online retailersto develop pricing strategies in different situations to maximize his profit.This paper summarizes and draws on previous research, establishes a dynamicoptimization model to solve the problem. Through the analysis，we offer the optimaldynamic pricing policy and corresponding properties, we also present and prove someproperties of revenue function. Through numerical experiments, we study the coefficientsensitivity, and compare the optimal revenue of both online-retailer and store under fourtypes of models. Based on the analysis, we find for online-retailer, no matter whichwholesale price strategy the store adopts, the optimal strategy is dynamic pricing, andthe static wholesale price strategy is more favorable for him; and for the store, his beststrategy is dynamic wholesale price strategy, it is more favorable if online-retailer adoptsfixed price strategy. When he takes static whole price strategy, whatever price strategythe online-retailer takes, his revenue is almost the same. Our study provides scientificpricing strategy for the online retailers and guides the stores to make scientific strategychoice.