Abstract
Online retailing provides alternative shopping channels, where the retail platform can either let manufacturers directly sell to consumers or open a self-operated channel, or even both. Regardless of sales channels, consumers often pay attention to the income gap between themselves and enterprises (namedconsumer’s fairness concern). In this work, we explore how consumers’ fairness concerns affect the optimal decisions of both manufacturer and retail platform under different retail channel modes (single-channel mode and mixed-channel mode). The results show that consumer’s fairness concern has a negative impact on the retail price under low production cost in single-channel mode, while the retail prices in mix-channel mode are jointly determined by consumer’s fairness concern and revenue sharing ratio. Besides, if the market channel mode has not yet formed, the retail platform can choose either a self-operated channel or manufacturer consignment channel, depending on the consumer’s fairness concern level and revenue sharing ratio. By contrast, if the market channel mode has already been formed, the retail platform should make effort to reduce consumer’s fairness concern if only the self-operated channel exists, while maintain consumer’s fairness concern and revenue sharing ratio at a moderate level if there exist mixed channels.
Highlights
With the rapid development of e-commerce, sales channels in the retail market have gradually diversified
Retail price of manufacturer’s consignment channel Retail price of retail platform’s self-operated channel Wholesale price of the product Consumer’s utility when purchasing through manufacturer’s consignment channel Consumer’s utility when purchasing through retail platform’s self-operated channel Manufacturer’s profit Retail platform’s profit Revenue sharing ratio, 0
When the retail market is a single-channel mode, retail prices are always negatively affected by concerns when production costs are low
Summary
With the rapid development of e-commerce, sales channels in the retail market have gradually diversified. A retail platform provides the manufacturer with online sales media and offers a guarantee and supervision for both parties of the transaction, while the manufacturer provides product display, order fulfillment on the platform Brands such as UNIQLO and ZARA will open flagship stores on Amazon, where the retail platform charges manufacturer slotting allowance and revenue sharing ratio [23,24]. Few articles study the impact of consumers’ fair concerns on the results of their channel selection and the pricing decisions and profits of all parties involved in the retail supply chain. From the perspective of enterprises(manufacturer and retail platform), we intend to address the following research questions by considering consumers’ fairness concerns: (1) What are the pricing decisions of manufacturer and retail platform under different channel structures? If the market channel mode has been formed, the retail platform should reduce consumer’s fairness concerns by providing product discounts when there is only retail platform’s self-operated channel.
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