Introducing of Online Channel and Management Strategy for Green Agri-food Supply Chain based on Pick-Your-Own Operations

Qifan Hu, Qianyun Xu and Bing Xu
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Qifan Hu: School of Management, Nanchang University, Nanchang 330031, China
Qianyun Xu: School of Sciences, Nanchang University, Nanchang 330031, China
Bing Xu: School of Management, Nanchang University, Nanchang 330031, China

IJERPH, 2019, vol. 16, issue 11, 1-25

Abstract: The popularity of e-commerce has impacted traditional retail business. Farmer cooperatives running green agri-food pick-your-own (PYO) farms are facing the choice of whether or not to adopt online channels. PYO operation refers to consumers picking and purchasing the agri-food growing on a farm, and due to it being environmentally-friendly, healthy, and popular, it has been widely adopted by many farm cooperatives. This paper aims to discuss the practicality of introducing online channels to already established PYO farms in the green agri-food supply chain (GASC), who can personally take charge of the online channel or transfer it to one online retailer. Firstly, we constructed the demand functions of green agri-food by putting consumer utility, the freshness of agri-food, and transportation cost into consideration. Secondly, five decision models are built to characterize five operation modes, namely pure PYO mode, self-operated dual-channel mode, decentralized dual-channel mode, centralized dual-channel mode, and contractual cooperation mode. Furthermore, by taking price, demand, and profit with different modes into consideration, we are able to explore the introduction of online channels and green brand construction. Finally, numerical analysis is performed. We found that: (1) introducing an online channel is preferable strategy since the profit of the farmer cooperative in pure PYO mode is always less than the profit of a farmer cooperative in non-self-operated dual-channel modes; (2) the decision of self-operating an online channel is related to the fixed cost of creating a new online channel and the green food brand effect of online channel, and it is the optimal mode in some cases, while the contractual cooperation mode is the optimal mode in the remaining cases; and (3) the green food brand effect of online channels is does not necessarily improve with scale, and the initial freshness has a positive relationship to the profit, demand, and price of farmer cooperatives and online retailers.

Keywords: green agri-food; pick-your-own operations; introducing online channels; freshness; cooperation contract (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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