A study on pricing and delivery strategy for e-retailing systems

• This study aimed at a two-echelon e-retailing system with two duopolistic suppliers.
• Delivery time and price are the competitive instruments.
• Equilibrium decisions are satisfactory and can prevent a destructive price war.
• Two suppliers would have different niches of business in terms of delivery time and price.

This study investigates the dynamics between price and lead time for an e-retailing system in which one of its commodities is offered by two duopolistic suppliers. A Stackelberg game is formulated by considering the two suppliers as the leaders and the e-retailer as the follower. The proposed model assists the channel members in getting an equilibrium relationship in a competitive environment. The results suggest that when a supplier chooses a shorter lead time as the competitive strategy, the other supplier should choose a lower price for counteraction, and channel members should understand the characteristics of demand before promoting their commodities.

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