E-tailer's procurement strategies for drop-shipping: Simultaneous vs. sequential approach to two manufacturers

This paper examines the effect of drop-shipping on the procurement strategy of an e-tailer who sells products for two upstream competing manufacturers. The e-tailer is powerful and determines her approach sequence, thereby resulting in simultaneous and sequential structures. Given an approach structure, we investigate the e-tailer's choice between the pure batch ordering (BO) and hybrid shipping (HS) modes. Interestingly, the e-tailer prefers simultaneous structure over sequential structure in the BO mode, while in the HS mode she chooses sequential structure. In the HS mode, the e-tailer prefers the batch ordering manufacturer to move first.