Impact of e‐marketplace on supply chain under the markdown policy

Purpose – This paper aims to explore the effect of e‐marketplace on the supply chain's performance under the markdown policy. Profit and risk analyses are both conducted and channel coordination issues are examined.Design/methodology/approach – The paper presents a markdown policy supply chain analytical model with e‐marketplace and examines the optimal markdown policy. The mean‐variance theory is employed to study both the risk and profit residing in the supply chain. Extensive numerical analysis is conducted. The paper investigates both the cases when e‐marketplace selling price is exogenous and endogenous.Findings – The markdown policy can coordinate the supply chain as long as the parameters satisfy certain analytical conditions. The expected profit and risk in the supply chain are both increased when e‐marketplace is introduced. The retailer shares a larger portion of the increased expected profit but at the same time bears a higher risk.Research limitations/implications – In this study, similar to t...