Operation strategies for nanostore in community group buying

•We develop a game-theoretical model to examine the interaction between the nanostore and e-tailer in the community group buying.•We analyze three operations strategies for the nanostore: competitive strategy, cooperative strategy, and co-opetitive strategy.•We investigate the conditions under which the nanostore would prefer one of the three operations strategies.•We indicate the effects of the nanostore's preferred operations strategy on the supplier and consumers. Nanostore operations are gaining prominence in the community group buying industry. Motivated by this development, we use a stylized game-theoretical model to investigate the conditions under which the nanostore prefers different operations strategies, such as the competitive strategy, cooperative strategy, and co-opetitive strategy. Our analysis shows that a nanostore's preferred operations strategy depends on the combined market parameters. While the nanostore prefers the competitive strategy and the co-opetitive strategy in many scenarios, it prefers the cooperative strategy in a few cases. Interestingly, we show that the nanostore has more incentives to prefer the competitive (co-opetitive) strategy when the production cost of the supplier is relatively high (low). We find that the preferred operations strategy of a nanostore does not necessarily benefit the supplier and the consumers, which may lead to channel conflict. Our results underscore the important role played by a nanostore's operations strategy and provide decision-makers with managerial insights for the community group buying industry.