Dual-channel Supply Chain Research Articles

Product Quality Matching Strategy in a Dual-Channel Supply Chain: A Perspective From Mental Accounting Theory in Behavioral Finance

We extend the mental accounting perspective to build models on product quality matching strategy, which is effective in resolving the conflict between traditional and online channels. We consider that perceived values of high-quality and low-quality products belong to different mental accounts, and construct three product quality matching strategies for a dual-channel supply chain. Comparing the profit of each member, we find that (1) the strategy where the traditional channel distributes premium products, while the e-tailer sells low-quality products, is most conducive to the manufacturer; (2) the profit elasticity of the e-tailer is larger than that of the traditional retailer; (3) traditional retailers should sell more price elastic products, and e-tailers should sell the product with lower price elasticity; and (4) the manufacturer has more monopoly power if consumers have a higher degree of acceptance for the online channel that distributes premium products.

The impact of information sharing and bullwhip effects on improving consumer services in dual-channel retailing

Data sharing among the supply chain players can be an exceptionally significant factor for the retailing industry. In this consideration, an improved retailing methodology for a dual-channel supply chain with a single retailer and manufacturer is built under the bullwhip effect and asymmetric data sharing. Retailer provides asymmetric information to the manufacturer regarding demand to increase their profit. In this scenario, measuring the bullwhip effect is essential in retailing strategy. By adopting an online-to-offline retailing strategy, industries can earn more profit and increase the satisfaction level of customers. The present study focuses on dual-channel retailing, where the demand for the product in both channels varies with the selling price. Keeping in mind the goal of sustainable development, an advanced transportation strategy is utilized in this study, along with some carbon emission costs. Autonomated inspection is utilized to identify defective products. Finally, centralized and decentralized profit functions are formulated for this study. Several cases and numerical examples are provided to validate this study. It is clear from the numerical findings that information sharing within the players provides 1.26% more profit compared to a decentralized case. Due to asymmetric information, which leads to the bullwhip effect, the retailing system faces loss. Thus, information sharing is 0.19% beneficial for dual-channel retailing. Sensitivity analysis for key parameters ensures the findings' applicability in the real world.

Pricing Strategy of Dual-channel Supply Chain with E-commerce Live Broadcast

As a novel sales strategy, live-streamed selling has drawn considerable interest. In this paper, we study a dual-channel live-streaming supply chain consisted of a single manufacturer, a moderate live streamer and a live-streaming platform. We construct two scenarios, the retail live streaming and commissioned live streaming modes, under manufacturer self-live streaming and investigates the optimal mode with the Stackelberg games. The study discovers: (1) Under the commissioned live streaming mode, the price of Internet celebrity live streaming is less expensive than that under manufacturer self-live streaming within a specific commission ratio and is proportionate to the commission ratio. (2) Under the retail live streaming mode, only when consumers' preferences are more concentrated on the manufacturer self-live streaming, the price of Internet celebrity live streaming is less than the manufacturer self-live stream channel. (3) In both scenarios, Internet celebrity live-streaming sales effort is consistently lower than the manufacturer self-live stream channel. Additionally, the consumer's sensitivity coefficient and the trust degree in Internet-celebrity streamer, the personal impact of Internet-celebrity streamer, and the proportion of impulsive consumers are all positively correlated with the price, sales effort, and profit of both channels.

Optimal two-period pricing strategies in a dual-channel supply chain considering market change

This paper considers a dual-channel supply chain consisting of one manufacturer with an online direct channel and one offline retailer who distributes the manufacturer’s products, both of whom may adopt a Different or Same price strategy over two periods (Strategy D or S). Strategy D(S) means that the manufacturer and retailer set different(same) retail prices for online and offline channels in the two sales periods. The main purposes of this research are to identify the manufacturer’s and the retailer’s optimal two-period pricing strategy and explore how consumers’ channel preference, price competition, and market change affect the strategy equilibrium. We derive and compare the equilibrium outcomes by establishing four game models: (1) Model SS, both the manufacturer and retailer adopt Strategy S; (2) Model SD, the manufacturer chooses Strategy S while the retailer selects Strategy D; (3) Model DS, the manufacturer chooses Strategy D while the retailer selects Strategy S; (4) Model DD, both choose Strategy D. The research findings demonstrate that most prices increase as the market change rate raises, except for the first-period prices under Model DD, which remain unchanged. Under the different prices settings, a shrinking market would impel supply chain members to utilize a skimming pricing strategy, while a growing market drives them to select a penetration pricing strategy. Different from traditional wisdom, Strategy D would always benefit the manufacturer, while it may hurt the retailer and the whole supply chain under certain conditions. Accordingly, either Strategy DS or DD may be the Nash equilibrium. After considering the consumers’ channel switching behavior, the retailer has more incentive to adopt Strategy S in a shrinking market.

Pricing Decisions and Game Analysis on Advanced Delivery and Cross-Channel Return in a Dual-Channel Supply Chain System

Advanced delivery and cross-channel return are new phenomena in Omni-channel marketing. This paper studies a dual-channel supply chain system composed of one online retailer, one physical store, and their ordinary manufacturer. It intends to explore the pricing decisions of retailers under four scenarios concerning the question whether deliver goods in advance and use cross-channel return. We analyze the impact of the operation costs of physical stores and the transportation costs of the online retailer on the above strategies, and with numerical examples, analyze the impact of consumers’ perceived value on the profits of each scenario. The results show that the default rate of consumers’ unpaid balance and the cross-channel return rate directly influences the online retailer’s strategy choice. The pricing of the physical store is related to the proportion of unpaid balance and return rate of the online retailer. Customers’ perceived value brought by advanced delivery leads to profit changes in supply chain members and is influenced by the online retailer’s cross-channel return strategy.

Pricing decisions during panic buying and its effect on a dual-channel supply chain under different channel power structures

Pricing decisions during panic buying and its effect on a dual-channel supply chain under different channel power structures

Effects of COVID-19 outbreak in pricing and collaboration of a health-social dual-channel supply chain.

The coronavirus pandemic has affected most aspects of product supply and consumer behaviors and led to transformations in the supply chain. The COVID-19 pandemic and the requirements to reduce its prevalence have led many people to shop online and encouraged many manufacturers to sell their products online. In this study, a manufacturer, who intends to possess an online sales channel, and a retailer, who has an in-person sales channel, are considered. Then, pricing strategies and collaboration mechanisms between them in the health-social dual-channel supply chain are investigated. This study is developed in three models, including centralized, decentralized, and collaborated under Stackelberg game, whereas the optimal price of products in each channel, level of implementation of health and safety protocols in retailers, advertising level, and status of online shopping performance are obtained for improving customer trust. Moreover, the demand is represented as a function of selling prices of products in online and in-person shops, compliance level of health protocols, level of online shopping performance, and advertising in health during the COVID-19 pandemic. Although the centralized model provides more profit for the manufacturer, the collaborated model provides the highest profit for the retailer. Thus, since the supply chain profit of centralized and collaborated models is close, the collaboration model is the best option for members in this situation. Sensitivity analysis is finally performed to evaluate the impact of key parameters, and then according to obtained results, some management insights are suggested for the dual-channel supply chain during the COVID-19 pandemic.

Quantum game perspective on green product optimal pricing under emission reduction cooperation of dual-channel supply chain

PurposeFrom the quantum game perspective, this paper aims to study a green product optimal pricing problem of the dual-channel supply chain under the cooperation of the retailer and manufacturer to reduce carbon emissions.Design/methodology/approachThe decentralized and centralized decision-making optimal prices and profits are obtained by establishing the classical and quantum game models. Then the classical game and quantum game are compared.FindingsWhen the quantum entanglement is greater than 0, the selling prices of the quantum model are higher than the classical model. Through theoretical research and numerical analysis results, centralized decision-making is more economical and efficient than decentralized decision-making. Publicity and education on carbon emission reduction for consumers will help consumers accept carbon emission reduction products with slightly higher prices. When the emission reduction increases too fast, the cost of emission reduction will form a significant burden and affect the profits of manufacturers and supply chain systems.Originality/valueFrom the perspective of the quantum game, the author explores the optimal prices of green product and compares them with the classical game.

PRICING AND SERVICE STRATEGIES OF DUAL-CHANNEL SUPPLY CHAIN UNDER INFORMATION SHARING

With the rapid popularization of online shopping, more and more enterprises adopt dual-channel supply chain structures, and information sharing plays an important role in the implementation of dual-channel supply chain management. Most of the existing literature has investigated one-way information sharing from the retailer to the manufacturer, whereas few studies on two-way information sharing between the manufacturer and retailer in a dual-channel supply chain have been explored. A dual-channel supply chain consisting of a manufacturer and a retailer, both of whom have private information about consumer preference and service cost was considered in this study. Game-theoretic models were developed to investigate the decision-making problem of dual-channel members in two information-sharing scenarios including non-information sharing and information sharing respectively. Furthermore, the impact of the manufacturer's information forecast capability on the sale price, service level, and profits were analyzed through numerical example. Results show that information sharing can increase the wholesale price, sale price, and online service level; furthermore, information sharing not always be beneficial for dual-channel supply chain members. When the information forecast capability of the manufacturer is relatively weak, information sharing can increase supply chain members' profits. On the contrary, information sharing may not always increase his profits. Additionally, the retailer cannot benefit from information sharing in any cases, which accounts for his weak willingness to share information with the manufacturer. This study provides a significant reference for decision-making. Keywords: dual-channel supply chain; information sharing; price decisions; service decisions

Dual-Channel Supply Chain Coordination with Loss-Averse Consumers

Most studies on supply chain coordination assume that consumers are rational. However, with the development of e-commerce, consumer-bounded rationality has become an important issue with respect to supply chain coordination. Based on the assumption that some consumers are loyal to the offline shop and others are reference-dependent, this article examines the mechanism of vertical restraints and their competitive effects. This research study found that compared with the assumption of rational consumers used in previous literature, vertical restraints help internalize the “channel price gap externality” when consumers are loss averse. When separately operating, the offline shop will set a higher price due to its consumers’ higher loyalty and willingness to pay. However, given the positive externality of this price to the online retail sales, the offline price is still lower than the level under vertical integration. When the upstream manufacturer achieves supply chain coordination with vertical restraint contracts, the channel price gap externality is internalized, and the channel price gap expands to stimulate loss-averse consumers’ purchasing decisions.

Online retailer bundling strategy in a dual-channel supply chain

Bundling is typically used by online retailers and is receiving increasing attention. We investigate bundling in a dual-channel supply chain whose members use an agency selling contract, where a manufacturer distributes its product with a constant price in the dual-channel and pays a commission fee for each product sold through the online retailer's channel. The online retailer can sell the product separately or, if the contract allows, package it as a bundle and decide the price of the bundle. A Stackelberg game model is developed to obtain insights for optimizing bundling decisions. First, we find that the manufacturer and online retailer cannot always benefit simultaneously from bundling. Bundling could often benefit the retailer but hurt the manufacturer because bundling transfers consumer demand from the manufacturer's channel to the retailer's channel, making the manufacturer pay more in commission fees. Second, we show that bundling can achieve a win-win outcome only when the online retailer sets a low price for the bundle and the commission rate is moderate. Our findings emphasize that the commission rate significantly impacts the optimality of bundling, and neither a low nor a high commission rate can make the two sides agree about adopting bundling.

Pricing Decision Models of Manufacturer-Led Dual-Channel Supply Chain with Free-Rider Problem

We study the strategic pricing decision models of manufacture-led dual-channel supply chains with the free-rider problem under the service level and cost. We use the Stackelberg model to study the impact of the degree with the free-rider problem of consumers on the optimal pricing strategy and the optimal service level of the dual-channel supply chain under various decision-making modes and carry out a numerical simulation. The main conclusions are as follows: In the retailer’s dual-channel supply chain, the deepening of consumer free-riding behavior will reduce the enthusiasm of retailers, but the weak position of the channel will lead to improved service levels and reduced prices, as well as to increase the wholesale price to cover costs. In the manufacturer’s dual-channel supply chain, the deepening of consumer free-riding behavior will lead to a decline in the retailers’ service level and enthusiasm, as well as to a decrease in the wholesale prices and retailers’ pricing. In the two types of dual-channel supply chains, the demand of manufacturers’ network channels increases, the price increases first and then decreases, and the profits of all supply chain members decrease with the increase in the free-rider coefficient of consumers. Finally, we use numerical simulation to verify the validity of the above conclusions, which provides a scientific basis to make optimal pricing decisions in the manufacturer-led dual-channel supply chain.

Optimal Policy for Probabilistic Selling with Three-Way Revenue Sharing Contract under the Perspective of Sustainable Supply Chain

Probabilistic selling (PS) is widely used in the travel industry and marketing practices; how to design a win-win contract using PS in multiple participants’ supply chain to achieve sustainable development has been a worthy concerned issue in the green supply chain development in China. To end this, we consider a three-players supply chain involving two firms and a common retailer in which the firms sell their transparent products via a dual channel, while the retailer sells probabilistic goods by a direct channel. First, the three players’ demand functions are derived using both a Hotelling model and taking account of consumers’ price reference effects. Second, we construct a probabilistic selling model for both decentralized and centralized supply chain systems. The optimal policies for the decentralized system are determined by employing Stackelberg sequential games and an analytical approach. Third, we propose a new three-way revenue sharing contract to deal with channel conflict. Furthermore, we determine the conditions under which the dual-channel supply chain can be coordinated to achieve a win–win situation for all participants. The results indicate that the retailer adopts probabilistic selling depending upon the relative values of the two manufacturers’ production costs in the three-way revenue sharing contract. More interestingly, PS not only can improve the supply chain’s efficiency, but also can coordinate the dual-channel supply chain to achieve a win-win situation for all participants. Finally, we present a numerical analysis to verify our results and a sensitivity analysis of the parameters involved.

Impacts of blockchain technology with government subsidies on a dual-channel supply chain for tracing product information

Transparent product information is a critical factor that promotes product sales. To satisfy the consumers’ expectation of product quality information, in practice, manufacturers (e.g., Beinmate, Aptamil, and Qiao’s compound) have adopted Blockchain Technology (BT) to help consumers trace the associated product information. In addition, the governments also encourage the application of BT by implementing relevant policies. This paper proposes a stylized dual-channel supply chain model to investigate the value added from adopting BT for manufacturers. We consider a setting that a manufacturer sells its product through two channels, i.e., offline retailer and online e-tailer. Under this circumstance, we find that the manufacturer is always willing to adopt BT to disclose product information. In particular, the offline retailer and consumers can receive benefits from this innovation, while the action is a double-edged sword for the online e-tailer. Moreover, under a special scenario that the government offers a quantity/innovation subsidy, we show that there exists a win–win–win situation for the manufacturer, the both selling channels, as well as the consumers. Finally, we compare the two subsidy policies and show that innovation subsidy can always achieve a better social welfare than quantity subsidy. Numerical examples are conducted to select the optimal subsidy policies and examine the extensions of this work.

Consumers' purchasing decisions of a dual-channel supply chain system under return and warranty policies

ABSTRACT With the rapid growth of internet technology, particularly during the COVID-19 pandemic, a major portion of consumers have intended to do online shopping. Also the use of eco-friendly products is essential in today's environment and human health. Thus this paper investigates the consumers' purchasing behaviour towards substitutable non-green and eco-friendly products in a dual-channel (offline and online channels) supply chain system. The manufacturer offers a novel combination of promotions such as a return policy in the online channel and a warranty policy in the offline channel depending on the position and situation of consumers. Here, the environmental burden is reduced by considering remanufacturing/refurbishing used products during the warranty period. Therefore, consumers' demand depends on price, eco-friendliness level, warranty and return agreements. The entire problem is modelled under centralised and decentralised decision-making scenarios. Finally, the profit maximisation problem is formulated and solved in the game theory framework. A series of sensitivity analyses of various parameters is conducted numerically to validate the problem. It is observed that, due to the instant return facility in the online channel, online demand is higher than the offline with a higher warranty period.

Contracting with countervailing incentives under asymmetric cost information in a dual-channel supply chain

This study investigates the optimal contract design with countervailing incentives under asymmetric selling cost information in a dual-channel supply chain comprising a manufacturer and retailer. The manufacturer’s selling cost is private and determines their reservation profit, which gives rise to type-dependent participation constraints. This study provides several intriguing results. First, when the external market correctly evaluates the selling cost advantage of the manufacturer, information asymmetry does not necessarily hamper channel efficiency, even in the dual-channel setting. Second, the retailer may distort the manufacturer’s selling quantity either upward or downward, while the retailer may distort their own selling quantity in the opposite direction. Such a synergistic effect unique to the dual channels may help the retailer balance information rent extraction and channel efficiency. Third, the manufacturer may benefit from intensified channel competition as long as the cost differential is not significant, or the cost differential is significant, but the channel substitution rate is relatively low. Finally, further examining the value of information, we demonstrate that the profit differential of the retailer (manufacturer, supply chain) exhibits an inverted U-shaped (U-shaped, hat-shaped) pattern with respect to the low-cost manufacturer’s reservation profit.

Pricing and Carbon Mitigation in a Dual-Channel Supply Chain: A Dynamic Game Approach

ABSTRACT Considering the low-carbon preference of consumers, this paper establishes a dynamic decision-making model to study the dynamic pricing decisions and carbon emission reduction decisions of dual channel supply chain members, and discusses the impact of carbon emission reduction on prices and profits. It is found that the distributor’s and the producer’s carbon mitigation can have a positive or negative impact on the distribution price, the direct sales price and the wholesale price. When the competition between the distributor and the producer is not fierce, these three prices will increase with the increase of their carbon mitigation. When the producer’s carbon mitigation effort has a positive impact on the distribution channel demand, the distributor’s profit will increase with the increase of the producer’s carbon mitigation effort. On the other hand, when the producer’s carbon mitigation effort has a negative effect on the distribution channel demand, the distributor’s profit will decrease with the increase of the producer’s carbon mitigation effort. In addition, the distributor’s profit is more sensitive to the producer’s carbon emissions. When the producer and the distributor jointly reduce emissions, appropriate coordination strategies are needed to coordinate the supply chain.

Impact of carbon emission difference on the dual-channel fresh produce supply chain with capital constraints

The difference in carbon emissions has an important impact on the decision-making of dual-channel fresh produce supply chain financing. We set up a Stackelberg game model of a dual-channel supply chain under the financing strategy of banks and retailers to study the optimal operation decision and financing strategy selection. Our analysis results show that when the retailer’s interest rate and the carbon emission difference met certain conditions, the supplier always chooses the financing strategy of retailers.

Decisions of pricing and delivery-lead-time in dual-channel supply chains with data-driven marketing using internal financing and contract coordination

PurposeThe purpose of this research is to investigate how to introduce a financing scheme to tackle the manufacturer's capital constraint problem, discuss the effects of data-driven marketing (DDM) quality, cross-channel-return (CCR) rate and financing interest rate on the members' pricing and delivery-lead-time decisions and optimal performances, and analyzes `how to achieve the coordination within a dual-channel supply chain (DSC) by contract coordination.Design/methodology/approachThis work establishes a DSC model with DDM, and the offline retailer can provide internal financing to the capital-constrained online manufacturer. The demand under the price is determined based on DDM quality, customer channel preference and delivery lead time. Then, combined with the Stackelberg game, the optimal pricing and delivery-lead-time decisions are discussed under the inconsistent and consistent pricing strategies with decentralized and centralized systems. Furthermore, it designs a manufacturer-revenue sharing contract to coordinate the members under the two pricing strategies.Findings(1) The increase of DDM quality will reduce the delivery-lead-time under the inconsistent or consistent pricing strategy and will push the selling prices; (2) The growth of the CCR rate will raise selling prices and extend the delivery-lead-time under the decentralized decision; (3) Under price competition, the offline selling price is higher than the online selling price when customers prefer the offline channel and vice versa; (4) The retailer and the manufacturer can achieve a win-win situation through a manufacturer-revenue sharing contract.Originality/valueThis paper contributes to the studies related to DSC by investigating pricing and delivery-lead-time decisions based on DDM, CCR, internal financing and supply chain contract and proposes some managerial implications.

Green investment and e-commerce sales mode selection strategies with cap-and-trade regulation

The development of e-commerce economy and the upgrading of ecological consumption demand are stimulating more consumers to pursue green products through e-commerce platforms. This paper theoretically studies the green investment strategy of the e-commerce company (ECC) and the interaction between this strategy and the e-commerce sales mode selection strategy of supply chain members from the perspective of profit maximization. We examine a dual-channel supply chain consisting of an e-commerce company (ECC) and a manufacturer of green products. The ECC has two green investment strategies: invests in green promotion services or not. This study examines the influence of green investment strategy on the ecological governance efficiency of carbon emission reduction policy and consumer market through four scenarios, based on the government’s cap-and-trade mechanism, and using Stackelberg game structures. A computational analysis of the case study reveals that participation of the ECC in green investment is more beneficial to the overall profits of the supply chain and more environmentally friendly. In the self-run sales mode, ECC’s participation in green investment is better for both profits and the environment, while the green investment behavior of the ECC is not always beneficial to the manufacturer. Only if the manufacturer is the weaker party or has the cost advantage, the manufacturer tends to choose the platform sales mode. Otherwise, the manufacturer tends to choose reseller sales mode. In platform sales mode, green investment behavior of the ECC is beneficial to the environment, the manufacturer’s profit and the whole system, but only when the manufacturer’s marketing ability is strong, the ECC can benefit from this green investment.