Randomization in Product, Fulfillment, and Pricing as a Profit Lever
Abstract: Randomization in Product, Fulfillment, and Pricing as a Profit Lever
First, we study blind boxes as a novel selling mechanism in which buyers purchase sealed packages containing unknown items, with the chance of uncovering rare or special items.
We show how such product randomization introduced by the blind box can improve the seller's profitability over traditional separate selling.
Second, we study how an e-commerce platform should assign sequentially arriving customers to sellers who compete to sell identical products on the platform.
The allocation rule may be random and dependent on the sellers' inventory levels. We show how such demand fulfillment randomization can incentivize sellers to hold more inventory and improve the platform's profitability and customer welfare.
Third, we study randomized promotions in which the firm randomly offers discounts over time to sequentially arriving customers with heterogeneous valuations and patience levels.
We show how price randomization can improve the firm's profitability beyond deterministic pricing policies.
Speaker Bio
Ming Hu is the University of Toronto Distinguished Professor of Business Operations and Analytics, a professor of operations management at the Rotman School of Management, and an Amazon Scholar.
He is the editor-in-chief of Nav. Res. Log., associate editor of Management Sci., Oper. Res., and M&SOM, and senior editor of POM.
He received a master's degree in Applied Mathematics from Brown University in 2003 and a Ph.D. in Operations Research from Columbia University in 2009.
For more about his research, please visit http://ming.hu.