<p>Community group buying (CGB) is becoming increasingly prominent in the retail industry. Two types of community leaders are prioritized by CGB platforms: offline retailers and flexi-operators (e.g. stay-at-home mothers). Specifically, this paper employs a game-theoretic analysis to investigate the selection strategies of community leaders and cross-channel competition in the context of CGB. Our results reveal that the offline retailer may potentially benefit from the emergence of community group buying under specific conditions. Moreover, if the offline retailer becomes a community leader, closing the offline channel will harm its total profit unless its offline inventory cost and platform’s commission are sufficiently high. Moreover, we find that consumers benefit from channel competition following the CGB platform’s entry, however, consumer surplus is significantly impaired if the retailer discontinues its offline operations, particularly when the platform’s return rate is relatively high. Our findings offer significant insights for platforms and offline retailers who are motivated to participate in CGB business.</p>

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Channel Competition and Community Leader Selection in Community Group Buying

  • Lei Yu,
  • Dexia He,
  • Manyu Li,
  • Peng Huang

摘要

Community group buying (CGB) is becoming increasingly prominent in the retail industry. Two types of community leaders are prioritized by CGB platforms: offline retailers and flexi-operators (e.g. stay-at-home mothers). Specifically, this paper employs a game-theoretic analysis to investigate the selection strategies of community leaders and cross-channel competition in the context of CGB. Our results reveal that the offline retailer may potentially benefit from the emergence of community group buying under specific conditions. Moreover, if the offline retailer becomes a community leader, closing the offline channel will harm its total profit unless its offline inventory cost and platform’s commission are sufficiently high. Moreover, we find that consumers benefit from channel competition following the CGB platform’s entry, however, consumer surplus is significantly impaired if the retailer discontinues its offline operations, particularly when the platform’s return rate is relatively high. Our findings offer significant insights for platforms and offline retailers who are motivated to participate in CGB business.