Pricing Strategy Of Group Buying With Social Interactions From A Supply Chain Perspective

Social group buying is an important strategy for promoting online sales.The popularization of social software promotes the development of social group buying.Social group buying is characterized with social interactions,with regard to traditional sales strategy,contributing to consumers’ information sharing and increasing user engagement.Group buying has become an important strategy for retailers.Supplier and retailer are located in upstream and downstream of supply chain respectively,displaying one kind of supply relationship.The game process between supplier and retailer will influence group buying strategy,therefore the paper studies pricing strategy of social group buying from a supply chain perspective.Firstly,considering the information gap between an informed consumer and a less informed consumer,the paper studies the impact of the game process between the supplier and the retailer on strategy selection including social group buying,volume strategy and margin strategy considering consumers’ information sharing.Then the paper derives equilibrium wholesale price for the supplier and equilibrium sales strategy for the retailer.Secondly,the paper differentiates between initial consumer and others according to perceived quality,and builds group buying profit models under the wholesale scheme and the agency scheme.By solving the profit models,the paper derives equilibrium wholesale price,equilibrium group buying price and equilibrium group buying scale.Finally,the paper compares the pricing strategy for group buying under the wholesale scheme and the agency scheme.The research results show that the supplier will set a wholesale price at an intermediate level and the retailer will choose group buying strategy when the information gap between an informed consumer and a less informed consumer is neither too high nor too low and when information sharing is efficient.Moreover,interval parameters for group buying strategy and volume strategy are smaller in supply chain environment.Under the wholesale scheme,the retailer will choose group buying when the product quality is high,and unit organizing cost and unit production cost are small.In the agency scheme,the boundary conditions for group buying and individual purchase are also related to the agency fee.The supplier will choose group buying when the agency fee is small enough.A higher agency fee will lead to a decrease in the supplier’s profit,but the profit of the retailer rises first and drops afterwards.In other words,the agency fee is not as bigger as better.With supplier’s endogenous product quality,both the product quality and group buying price are higher in the wholesale scheme than those of the agency scheme.