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Retailers that sell seasonal products face significant challenges when planning inventory assortment. The incorporation of drop-shipping into their operations, wherein suppliers own and ship products directly to consumers at retailers’ requests, has only complicated these challenges. This study investigates multichannel assortment planning of retailers that sell seasonal products. We first capture structural properties of multichannel retailing of seasonal products through a simple and parsimonious analytical model. The analytical model uncovers key seasonal product attributes that make it more attractive for retailers to allocate a product for sale in the drop-shipping channel than in the store channel. We then empirically assess the findings of the analytical model. Using a rich and unique dataset from the fashion retail industry, we test relationships between product attributes and retailers’ channel choice. The application of a generalized linear latent and mixed model controls for selection bias by jointly estimating retailers’ likelihood of allocating a product’s inventory to the drop-shipping channel and the allocated volume in each channel according to the product’s characteristics. The empirical findings suggest that retailers are less likely to drop-ship products that are colored, irregularly sized, and offered in more style variants. They also unveil cross-channel effects in terms of inventory amounts allocated for sale in each channel according to those characteristics. Our analytical and empirical assessments jointly demonstrate the complementary roles played by drop-shipping and store channels for seasonal products and offer important academic and practical implications.

Problem definition: Firms developing novel and innovative products regularly face a canonical product development and introduction problem: introduce a proven and immediately available product or delay product introduction until the successful development of an advanced version. Academic/practical relevance: Limited access to resources for the development of an advanced version adds another wrinkle to this problem, particularly for cash-constrained start-ups. For such start-ups, the introduction of an on-hand product can generate additional funds to support the development of an advanced product. However, the lower performance of the on-hand product can negatively impact the perception of the firm’s future products and lower future profitability. Methodology: We study the trade-off between revenues that an on-hand product generates for research and development funding and the negative effect it has on future profits. We characterize the optimal introduction timing of the on-hand product as a function of the financial resource constraints, the interdependence between these sequential products and the cost of development. Results: We identify important differences between the optimal product introduction strategies of a start-up and an established firm. Specifically, although it is always optimal for an established firm to accelerate the launch of a better-quality on-hand product, a start-up might find it optimal to delay its launch. The impact of technological failure and different forms of learning on the optimal strategy of the start-up are also explored. We translate our analytical findings into a managerial framework and illustrate these results using examples from the pharmaceutical and medical devices industries.

A firm seeking a business partner, or an individual searching for a life partner, can use an online matching platform not only to efficiently search for available candidates, but also to address two related challenges. First, a match-seeker may not know what candidates would be compatible with them. And second, particularly in the online setting, candidates may misrepresent their credentials. In this paper, we model and analyze whether an online matching platform’s decisions should enhance search with a positioning capability that helps match-seekers determine the subjective compatibility of potential matches (horizontal differentiation), and also whether it should offer an authentication service that enables match-seekers to reliably signal their objective quality (vertical differentiation). We analyze the equilibrium behavior of match-seekers in the presence of uncertainty about both compatibility and quality of potential matches, and show how this behavior impacts the optimal strategy of the platform with respect to positioning and authentication. For instance, positioning and authentication reinforce each other (act as complements) for some levels of market quality and the platform's positioning capability, while they detract from each other (act as substitutes) in others. These results also help us develop guidelines for the platform's pricing decisions. Our findings provide valuable practical insights for owners and operators of match-making platforms, by helping them understand the interplay between these two important and orthogonal features in online matching. .

Compared to offline matching markets, online matching platforms improve search in the matching process but at the same time increase the problem of authenticating the features and credentials of pr...

A key barrier to companies successfully engaging customers in the design of new products is customers fearing that they will be forced to pay much more for the custom products they help design. This fear is justified by the fact that once the customer has invested significant time and effort in co-designing a product, the firm can extract the entire consumer surplus through higher prices. At the same time, the firm allowing its customers to co-design products would be unlikely to commit to a price up front before knowing the complete design of the custom product, since it would then face a significant risk of losing money. In this paper, we develop analytical models for this problem, and show how a firm can motivate its customers to engage in co-design. We also show how offering co-design can impact the firm’s product (line) strategies and the quality of its products, including motivating the firm to increase the quality of its standard product, sometimes even beyond the efficient quality level. The effect of market and firm characteristics on the value of engaging customers in the co-design process is also examined. In addition, we analyze the effects of (a) information asymmetry about the firm’s co-design capability, and (b) competition, on the firm’s decisions regarding co-design. These results provide valuable insights for managers considering investment in technology to support customer co-design. The online appendix is available at https://doi.org/10.1287/isre.2017.0729 .

Compared to offline matching markets, online matchmaking firms improve search in the matchmaking process, but at the same time, increase the problem of authenticating the features and credentials of prospective matches. This paper examines the interplay between these two processes in online matchmaking, using game-theoretic models. We examine whether an online matchmaking firm should target a broad market of match seekers, or an exclusive group of high-value seekers, and how the firm can use a two-part pricing approach for search and authentication services. Our results provide valuable insights for online matchmaking firms regarding the trade-offs between search and authentication services, and providing guidelines for the pricing and positioning of their services. For instance, we show that the complementarity of the firm's optimal pricing for search and authentication services can lead to the firm offering an authentication service as a loss leader, and that higher quality authentication services may not justify higher authentication fees. We also develop guidelines for the firm's optimal strategies for different market conditions.

A key barrier to companies successfully engaging customers in the design of new products is customers fearing that they will be forced to pay much more for the custom products they help design. This fear is justified by the fact that once the customer has invested significant time and effort in co-designing a product, the firm can extract all the resulting consumer surplus through higher prices. At the same time, the firm allowing its customers to co-design products would be unlikely to commit to a price up front before knowing the complete design of the custom product, since it would then face significant risk of losing money. In this paper, we develop analytical models for this problem, and show how a firm can motivate its customers to engage in co-design. We also show how offering co-design can impact the firm's product (line) strategies and the quality of its products, including motivating the firm to increase the quality of its standard product, sometimes even beyond the efficient quality level. The effect of market and firm characteristics on the value of engaging customers in the co-design process is also examined. In addition, we show that the presence of information asymmetry about the firm's co-design capability may lead to even higher levels of co-design effort by the customer. These results provide valuable insights for managers regarding the potential value of supporting customer co-design.