Abstract
In the apparel supply chain, brick-and-mortar stores rely on sales effort to increase demand. However, the cross channel free-riding behavior of “experience offline, purchase online” will harm sales profit of physical stores. In order to solve the problem, this paper considers a multi-channel apparel supply chain consisting of an upstream manufacturer and a downstream retailer, where the manufacturer opens an online direct channel and the retailer opens offline and online channels. First, a Stackelberg game model is established between the manufacturer and the retailer. Then we study equilibrium retail prices, the sales effort level and the supply chain performance under centralized decision, decentralized decision and surplus profit-sharing (SPS) decision. Finally, the optimal results in the three decisions are compared and analyzed from perspectives of the manufacture, the retailer and the whole supply chain. Our research results show that: 1) surplus profit-sharing contract can improve retailer service level and supply chain profits, which also could avoid price competition among three channels and alleviate the negative impact of showrooming. 2) The greater the showrooming effect in multi-channels, the less the supply chain profits will get. 3) It is beneficial for the retailer to add a retailer’s online channel on typical dual channels.
Highlights
Clothing industry is the most important and indispensable industry in the world, which has developed very rapidly in the past decades (Guo et al, 2020; Hsiao et al, 2019)
This paper presents the different performance of the manufacturer and the retailer in three channel models when customers have showrooming behavior in multi-channels, studies whether profit sharing mechanism can coordinate their price, sale efforts and supply chain profit
This paper mainly studies the influence of free riding behavior on retailer’s sales effort and supply chain profit in multi-channel clothing supply chain
Summary
Clothing industry is the most important and indispensable industry in the world, which has developed very rapidly in the past decades (Guo et al, 2020; Hsiao et al, 2019). This paper will study how to reduce the negative impact of free riding behavior of customers in the multi-channel apparel supply chain. The retailer’s online channel indirectly obtains additional demand through the sales efforts of physical stores, while competing with the manufacturer’s online channel Facing this situation, manufacturers are unwilling to share the retailer’s sales effort costs, so they do not adopt the cost sharing contract (CSC) coordination mechanism as commonly used in dual channels. If customers experience the service in the retail stores, more people choose the manufacturer’s online channel, which drives the manufacturer to earn more profits. At this time, manufacturers and retailers can bargain to distribute residual income, so they can sign SPS contracts.
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