Strategic Waiting for Disruption Forecast in Cross-Border E-Commerce Operations

Posted: 26 Nov 2020

See all articles by Baozhuang Niu

Baozhuang Niu

School of Business Administration, South China University of Technology

Kanglin Chen

Hong Kong University of Science & Technology (HKUST) - Dept. of Industrial Engineering and Decision Analytics

Lei Chen

Department of Administrative Management, Jinan University

Chao Ding

The University of Hong Kong - School of Business

Xiaohang Yue

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business

Date Written: October 7, 2020

Abstract

Motivated by dual sales channel operations in cross-border e-commerce, we analyze an e-tailer's strategic waiting decision for channel disruption information in a global supply chain. The e-tailer operates two sales channels: a bonded-warehouse channel with products pre-stocked before channel disruption for demand fulfillment, and a direct-shipping channel with products delivered directly from an overseas supplier. The direct-shipping channel is exposed to disruption risk that might be caused by extreme weather events. Forecast about the disruption is accurate and the e-tailer has the option of waiting for disruption forecast and postponing the order decision in the bonded-warehouse channel. We find that the e-tailer is better off by waiting if the direct-shipping channel is either more or less important compared to the bonded-warehouse channel. We identify two effects for elaboration: channel-coordination effect and unit-cost effect. By waiting, the e-tailer has the flexibility to adjust the stock in the bonded-warehouse channel, depending on whether the direct-shipping channel will be disrupted (channel-coordination effect). However, anticipating the e-tailer's improved channel coordination, the supplier might raise the wholesale price to extract more profit from the e-tailer (unit-cost effect). We show how the interactions of these two effects shape the e-tailer's strategic waiting decision. We also show the robustness of the main results in extended models by considering demand spillover and transshipment across channels, product substitutability, and imperfect disruption forecast.

Keywords: strategic waiting, disruption forecast, cross-border e-commerce, global supply chain management

Suggested Citation

Niu, Baozhuang and Chen, Kanglin and Chen, Lei and Ding, Chao and Yue, Xiaohang, Strategic Waiting for Disruption Forecast in Cross-Border E-Commerce Operations (October 7, 2020). Available at SSRN: https://ssrn.com/abstract=3706641

Baozhuang Niu (Contact Author)

School of Business Administration, South China University of Technology ( email )

Wushan
Guangzhou, AR Guangdong 510640
China

Kanglin Chen

Hong Kong University of Science & Technology (HKUST) - Dept. of Industrial Engineering and Decision Analytics ( email )

Hong Kong

Lei Chen

Department of Administrative Management, Jinan University ( email )

Huang Pu Da Dao Xi 601, Tian He District
Guangzhou, Guangdong 510632
China

Chao Ding

The University of Hong Kong - School of Business ( email )

Pok Fu Lam
Hong Kong

Xiaohang Yue

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business ( email )

P.O. Box 742
3202 N. Maryland Ave.
Milwaukee, WI 53201-0742
United States

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