The Impacts of an Electronic Marketplace with Multiple Independent Retailers for Smart Grocery Ordering Systems

Abstract

This study investigates the impacts of an electronic marketplace with multiple independent retailers for a smart grocery ordering system. Apart from replenishing products from suppliers, the system can also purchase/sell products from/to the electronic marketplace through 'spot shops'. Both static and dynamic pricing models for the electronic marketplace are developed. An extensive numerical experiment is conducted and the results show that under both static and dynamic pricing, (i) the inventory cost of the aggregated supply chain is significantly reduced; (ii) each participant also enjoys significant cost savings from employing the electronic marketplace. Furthermore, the cost savings increase as the lead times from suppliers increase and/or the variability of their demands increases. The participants' cost savings also increase as more participants employ the electronic marketplace.