Cross-channel influences in mobile-app-website e-commerce supply chains: When to weaken the influence?

Abstract

Today, e-commerce has entered the mobile era in which consumers can shop through both mobile app (MA) and website (WS) channels. By strategically designing the linkage between the two channels based on the cross-channel influences, companies can better handle the demand uncertainty of seasonal products. In this paper, we consider a dual channel e-commerce supply chain with an e-tailer and a manufacturer selling a seasonal product. We analytically examine how the e-tailer can (i) adopt risk pooling by aggregating the demands from both the MA and WS channels and (ii) invest in forecast-enhancement technology (FET) to improve inventory management. We uncover that when the magnitude of cross-channel influences increases, the impacts on the optimal inventory decision vary greatly depending on four different “model cases”; interestingly, it does not affect the optimal FET decision. Considering the impacts of cross-channel influences on the e-tailer’s expected profit, we reveal that the optimal weakening or strengthening strategy, i.e., “creating barriers” or “enhancing linkage” between two channels, depends on the e-tailer’s channel operations models. Then, we find that the optimal weakening or strengthening strategy follows the same pattern as in the basic model when the dual channel e-commerce supply chain is coordinated under a Nash bargaining framework. Last but not least, we study the potential use of blockchain technology to improve the effectiveness of FET investment. We surprisingly find that using blockchain or not does not affect the optimal MA and WS design decisions on weakening or strengthening linkages.