Abstract Online retail pharmacies usually price their products differently from traditional drugstores. Based on real-time consumer behaviors, this paper proposes a dynamic bundle pricing strategy to maximize the pharmacy’s profit. Given free shipping thresholds and consumer budgets, we propose a mixed-integer nonlinear programming model and a heuristic to sequentially price customized bundles. We further conduct a numerical study using the data from a leading e-pharmacy in China. Our computational results indicate that the proposed model not only improves the e-pharmacy’s profit by attracting more customers but noticeably contributes to consumer surplus. Through sensitivity analysis, our model is proved to be robust under various scenarios.
Highlights We study a dynamic bundle pricing strategy to maximize the e-pharmacy’s profit. We develop a mathematical model and a heuristic to price customized bundles. We conduct a numerical study using the data from a leading e-pharmacy in China. Our model improves the e-pharmacy’s profit and increases consumer surplus.
Interactive bundle pricing strategy for online pharmacies
2023-07-09
Article (Journal)
Electronic Resource
English
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