A Study Of Service Investment Optimization For Online Retailers With Social Network

Since the late nineties,information technology,which is presented by the internet,has developed rapidly.Depending on the quick growth of usage of internet,online shopping has been in explosive developing progress since then.The research of online shopping related operation management gradually becomes one of the most popular research topics in management science.As one of the most significant links in operation management,research of service investment attracts attention of more and more researchers.Meanwhile,different from offline shopping,by doing online shopping,customers can be fully aware of the information they need from social network,which can affect their purchasing behavior,such as the service level of online retailers,the price and quality of the product,etc.After their purchasing,customers can leave their comments on the product and service quality before or after sale through social network.These behaviors will have significant impact on the service investment strategies,the profit and market share of the firms.Thus,it is quite necessary for us to study the emerging service investment strategies for online retailers with social network.Under the business environment above,we study the service investment strategies for online retailers with social network.On the base of mathematical model,we use analytical or numerical method to maximize the profit or market size for online retailers.According to the different research perspectives,we divide the dissertation into the following sections.First,we study how service investment strategies and initial market share affect the profit and limiting market share of the firm in the single firm model in Chapter 3.Specifically,by building the model containing customer flows,we describe the changing of profit and market share,conducted by customers,attitude,which is affected by social network and purchase experience.Based on this,we use the numerical method to optimize profit and limiting market share.We conclude that the initial market share of the firm has no impact on the limiting market share.Different from the fact that market share always increases with the increasing investment cost,profit is monotone increasing with the investment cost.Over investment does decrease the firm's profit.Secondly,we study how service investment strategies affect the profit and limiting market share of the firm in the two-firm model in Chapter 4.What is different from the study in Chapter 4 is that,the existence of competition adds more complexity to the related research.By building the model containing customer flows and competition between two leading firms,we study the optimal investment strategies of both firms to maximize the profit or market share,considering the different competition mode(Nash Equilibrium or Stackelberg Competition),related parameters of competing firms(symmetric or asymmetric)and the existence of social network(yes or no).We find that,social network will accelerate the speed of convergence of the market share and increase the profit.When parameters of competing firms are asymmetric,optimal service investment strategies are different from each other.In spite of social network,the firm,which acts as a follower,always gains profit not higher than the leader in the Stackelberg Competition.Based on the research above,the main innovations and contributions of the thesis can be summarized as follows.1)Different from the traditional research on inventory investment or capacity investment,our research focus on the service investment,which has a significant impact on online retailing.Further,we combine the service investment with service competition,giving the optimal service investment strategies analytically or numerically,which is rare in the previous research.2)When studying the service investment,we analyze both the monopoly and duopoly markets carefully,giving optimal service investment strategies maximizing profit or market share.3)We study the effect that social network has on profit and market share of the firm in different cases(different competing mode or asymmetric parameters).Based on that,we give suggestions to competing firms,aiming at maximizing profit or market share,on how to invest in service and selection on being the leader or follower in Stackelberg Competition.This makes our research more practical in application.