How Does the Extended Promotion Period Improve Supply Chain Efficiency? Evidence from China’s Online Shopping Festival

In 2020, the “Double Eleven” shopping festival, the world’s largest online shopping festival, extended its promotion period from 1 day to 20 days for the first time, topping nearly $74.1 billion in sales. Extending the promotion period can have a profound impact on supply chain efficiency, e.g., sales and returns. On the one hand, an extended promotion period facilitates the public praise effect to produce stronger purchase power in the market, thus increasing sales. On the other hand, an extended promotion period can effectively reduce returns as it enables consumers to make more rational purchase decisions. In this work, we analyze the impact of the extended promotion period on supply chain efficiency. More specifically, we first develop a modified susceptible infected recovered (SIR) model to derive the total number of consumers who are willing to participate in the online shopping festival, which is time dependent. Then, we use the consumer utility model to calculate the respective numbers of consumers who purchase and return during the extended promotion period. Moreover, we numerically analyze the impacts of different parameters on the platform’s supply chain efficiency during the online shopping festival. Finally, a case study based on Taobao’s “Labor Day” online shopping festival in 2021 is conducted to derive more managerial insights from the analytical findings. Our results suggest that extending the promotion period can increase the Taobao’s sales revenue by 37.9% and can decrease its costs due to returns by 9%.