Optimal distribution strategy and online channel mode by considering retailer's fairness concerns

Abstract

<p style='text-indent:20px;'>In supply chain systems, when retailers have fairness concerns behavior, how to choose distribution strategy and online channel mode is significant to improve the operation efficiency of the supply chain systems. A game theory is used to model the competitive relationship between a manufacturer and a retailer or an E-commerce platform in a dual-channel supply chain. The manufacturer can sell high-quality or low-quality products through online or offline channel. The manufacturer can directly sell products to consumers by himself or the E-commerce platform through the online channel. The manufacturer also can wholesale products to retailers and then retailers sell products to consumers through the online channel. Combining the two distribution strategies and three online channel modes, six dynamic models are constructed to analyze the effect of retailer's vertical and horizontal fairness concerns on the decisions of supply chain members. The results show that: the manufacturer direct selling mode and distribution strategy of selling high-quality or low-quality products through offline or online channel is better for the manufacturer and supply chain system under most conditions, which will damage the retailer's benefit. The retailer's fairness concerns do not affect the pricing strategy and consumer demands, and they do not necessarily bring more benefits to the retailer. When the E-commerce platform sets an appropriate commission fee, the agency selling mode is the best choice for supply chain members.</p>