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Interactive bundle pricing strategy for online pharmacies

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  • Li, Jianbin
  • Liu, Lang
  • Luo, Xiaomeng
  • Zhu, Stuart X.

Abstract

Online retail pharmacies usually price their products differently from traditional drugstores. Based on real-time consumer behaviors, this paper proposes a dynamic bundle pricing strategy to maximize the pharmacy’s profit. Given free shipping thresholds and consumer budgets, we propose a mixed-integer nonlinear programming model and a heuristic to sequentially price customized bundles. We further conduct a numerical study using the data from a leading e-pharmacy in China. Our computational results indicate that the proposed model not only improves the e-pharmacy’s profit by attracting more customers but noticeably contributes to consumer surplus. Through sensitivity analysis, our model is proved to be robust under various scenarios.

Suggested Citation

  • Li, Jianbin & Liu, Lang & Luo, Xiaomeng & Zhu, Stuart X., 2023. "Interactive bundle pricing strategy for online pharmacies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    • Handle: RePEc:eee:transe:v:177:y:2023:i:c:s1366554523002119
    DOI: 10.1016/j.tre.2023.103223
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