Online Retail Channels Research Articles

Choosing an online retail channel for a manufacturer: Direct sales or consignment?

We analyze a manufacturer's e-channel decision problem in which the manufacturer selects a direct-sales channel or a third-party consignment channel to complement his existing physical retail channel. We accordingly investigate two possible dual channels: a PD system involving a physical channel and a direct e-channel, and a PC system consisting of a physical channel and a consignment e-channel. For each system, we examine both a sequential-move game and a simultaneous-move game, as the manufacturer can strategically decide to announce his pricing decision before the physical retailer or to make his pricing decision with no communication with the physical retailer. Our analytical results indicate that, if the manufacturer's unit operating cost in the direct e-channel or the e-tailer's revenue allocation ratio in the consignment e-channel is sufficiently small, then the manufacturer has an incentive to adopt an e-channel. The manufacturer can always gain a higher profit by announcing his pricing decision before the physical retailer. If the manufacturer aims at increasing the demand, then he may choose the simultaneous-move game. Moreover, when the manufacturer selects an e-channel to increase his profit, he should adopt a direct e-channel if his unit e-channel operating cost is below a certain threshold that is dependent on the e-tailer's revenue allocation ratio, and adopt a consignment e-channel otherwise. A similar managerial insight is drawn when the manufacturer intends to increase the demand.

Cross-national variation in consumers' retail channel selection in a multichannel environment: Evidence from Asia-Pacific countries

This study examines the impact of cross-national variation in culture on the selection of retail channels in a multichannel environment in eight Asia-Pacific countries. In contrast to the prior literature, which examined the intention to purchase through online channels, we study the actual purchase decisions made by consumers by comparing online and telephone channels. We adopt Hofstede, Hofstede, and Minkov's (2010) six cultural dimensions (power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, long vs. short-term orientation, and indulgence vs. restraint) to examine the impact of cross-national variation in culture on online vs. telephone retail channel selection. The empirical findings suggest that countries with high uncertainty avoidance and long-term orientation are less likely to adopt online channels rather than telephone channels, whereas countries with high individualism, high masculinity, and high indulgence are more likely to adopt online channels. These findings highlight the importance of cross-national variation of culture on retail channel selection.

Impact of supply chain power and drop-shipping on a manufacturer’s optimal distribution channel strategy

With the expansion of the Internet and the proliferation of e-businesses, many manufacturers have chosen to distribute products through online retail channels in addition to brick-and-mortar retail channels. In this paper, we consider a dual-channel supply chain in which a manufacturer considers selling a product through a conventional retail channel and an online channel. Considering two common procurement and order fulfillment policies for online retailers (etailers), conventional batch ordering and drop-shipping, we investigate the impact of supply chain power structure in terms of market power and retail channel dominance on a manufacturer’s optimal distribution channel strategy. We analyze and compare the two procurement models with respect to the etailer’s order fulfillment policies. We find that a manufacturer never prefers a drop-shipping etailer as the first mover in a sequential pricing game with a batch ordering traditional retailer. The manufacturer prefers to award the power of retail channel dominance to a batch ordering retailer with relatively high market power even if the etailer also follows a batch ordering policy. Drop-shipping benefits both the manufacturer and the etailer when the etailer has relatively low market power.

Pricing and bargaining strategy of e-retail under hybrid operational patterns

Dual-channel, as a significant retail strategy, has got more and more attention for academia and industry. While most literature focus on the conflicts between traditional channel and online channel, there are few works consider the conflicts of online retail channels. This paper focuses on the pricing and bargaining strategy of manufacturer and e-retailer under hybrid operational patterns which are adopted by e-commerce platforms. The operational patterns are divided into two types: other-organization e-pattern, such as Amazon, and self-organization e-pattern, such as Alibaba. We consider the commission charge which is collected by self-organization e-platform; and the analysis reveals that a fixed commission only has an effect on the total profit of manufacturer, but a variable commission would influence the wholesale price of other-organization e-platform and e-retail prices of both e-platforms, respectively. The results also suggest that, the wholesale price and the e-retail price are both affected by the service quality and this effect is also influenced by the variable commission. In addition, we also discuss the possibility of the manufacturer and e-retailer adjust their pricing strategy based on big data implementation.

Not all adaptive selling to omni-consumers is influential: The moderating effect of product type

Computer-mediated technologies have resulted in a proliferation of the omni-channel consumer (OCC) who shops for products and services using mobile, online, and traditional retail channels. While OCCs may have greater access to information, they do not necessarily have access to accurate information; hence the salesperson has both a challenge as well as an opportunity to use adaptive selling techniques when selling to the OCC. To better understand under what circumstances the salesperson can best be utilized to bring about the sale with the OCC, this research develops and evaluates a model of adaptive selling behaviors when selling to omni-channel consumers around the globe. Adaptive selling behaviors are conceptualized as having two dimensions, non-interactive and interactive adaptation. The efficacy of these two types of adaptive selling behaviors depends upon product type (utilitarian, hedonic) and OCCs' perceived control over the buying situation. To test the hypotheses, survey data was collected from global OCCs in four different countries and evaluated using path analysis. Results suggest salesperson’s influence depends upon product type and salesperson's adaptive selling behavior.

The Proposed Merger of Staples and Office Depot: Lessons from History and New Competitive Concerns

The proposed combination of Staples and Office Depot presents the Federal Trade Commission (FTC) with a host of merger review challenges. The transaction follows closely on the heels of the Office Depot/OfficeMax merger in 2013 and would complete a rapid 3-1 consolidation of the office supply superstore (OSS) market. Both retail and business-to-business customers may be significantly affected by the proposed transaction. The deal puts front and center the question whether evolving alternative business models for the sale of consumable office supplies are a viable substitute for OSSs. It also raises issues that the Commission recently addressed in the successfully enjoined merger of national broadline food service distributors Sysco and U.S. Foods - namely that a merger of the only two rivals in a national market may have adverse unilateral effects in a targeted customer market.The American Antitrust Institute (AAI) is concerned that the proposed transaction may substantially lessen competition in the market for the sale of consumable office supplies to large multi-regional or national customers on a contract basis (hereinafter “enterprise customer market” or “enterprise market”). In particular, we are concerned that the proposed transaction threatens substantial unilateral anticompetitive effects that alternative supply responses could not ameliorate, and that harm to customers in this market will be passed on to consumers. Some of these harms implicate unique dimensions of quality competition involving cyber security and supply chain stability. We also raise questions as to whether rapid 3-1 consolidation threatens to reverse recent positive competitive developments in the retail office supply market, as well as the competitive significance of merging the only “omnichannel” retailers principally devoted to office supplies.The analysis in this white paper is based on our review of publicly available information and conversations with industry experts and analysts. Because we do not have access to confidential or proprietary information that the Commission collects in the course of its investigation, we draw no conclusions as to whether the merger violates Section 7 of the Clayton Act. However, our analysis makes clear that the proposed merger warrants very close scrutiny by the Commission. Major themes that emerge from this analysis include: The Commission should determine whether there is a distinct relevant product market for the sale of consumable office supplies to large “enterprise” office supply customers on a contract basis, and if so, who participates in this market. This is consistent with the Commission’s successful approach to defining targeted customer markets in Sysco v. Fed. Trade Comm’n.The enterprise contract market likely is a relevant antitrust market because enterprise customers have no viable substitutes for the product and service offerings provided by OSSs. The next largest rivals are distant to Staples and Office Depot and are unable to compete on the scale and scope of the merging parties. Moreover, the merging firms may be the only participants in this market, because potential supply-side responses likely would fail to defeat a post-merger price increase in the market.The proposed transaction threatens substantial unilateral anticompetitive effects in the enterprise market, and possibly also in the broader market for all contract customers. Potential anticompetitive harm arises not only from the loss of ordinary head-to-head competition between the merging firms, which is substantial, but also from the loss of competition to provide superior cyber security to contract customers and by increased supply chain fragility resulting from elimination of any redundancy in the OSS channel. Potential anticompetitive effects are unlikely to be mitigated by repositioning or new entry.In its 2013 review of the OfficeDepot/OfficeMax merger, the Commission likely did not go far enough in distinguishing among competitive dynamics within and across the retail distribution channels through which OSSs provide products to end consumers. Although competition in the pure online retail channel is likely disciplined by national competition from Amazon and others, there are competitive concerns in the traditional superstore channel and in the emergence of omnichannel stores that warrant careful attention.

China’s Book Retail Market Generates 10 % Growth for 2014, Maintaining a Leading Position in the World

According to the research of OpenBook China, the value of overall Chinese book retail market was more than 50 billion Yuan in 2014, of which the physical bookstore retail channel scale was about 34 billion Yuan, and the online retail channel reached 20 billion Yuan. The total book retail market including online and physical channels achieved a growth rate of about 10 %. It is a remarkable growth even in the whole world. In China, children’s book market continued to maintain high growth in the past few years. Resulting from bestsellers, biography and literature were in high positive growth rate.

Perceived customer showrooming behavior and the effect on retail salesperson self-efficacy and performance

The increasing product commoditization and price transparency afforded by online retail channels have left many brick and mortar stores bearing the costs associated with being used as a physical showroom without reaping the rewards of the final sale. As customers continue to take advantage of retail stores to gather information and turn to competing channels for purchasing, the role of the retail salesperson has shifted and retailers have been left without a clear understanding of how to manage this change in the retailing landscape. In this research, we first define “showrooming” – and investigate individual (i.e., salesperson)-level experiential consequences of perceived showrooming. We find negative relationships between perceived showrooming and salesperson self-efficacy and salesperson performance, which are positively moderated by salesperson coping strategies and cross-selling strategies. Our findings suggest that the negative effects of showrooming can be combated though specific salesperson behaviors and strategies. Further, exploratory findings at the store level reaffirm a negative relationship between perceived showrooming behaviors and performance. Finally, we discuss the theoretical and practical implications of our findings and offer specific managerial actions to address showrooming.

A Study on the Price Decisions of the Dual-Channel Composite Decision in B2C Mode

This paper studies the subject of pricing decisions of online dual-channel based on hybrid decisions wherein a manufacturer introduces direct online marketing channels beyond the traditional online retail channels. The purpose is to study how to balance the interests of different online channels and maximize the overall efficiency of the channel. Having considered both online channels' satisfaction and the hidden costs of channel selection, by means of the demand function of both channels derived from a consumer utility and selection model, the author investigates the impacts of these two factors on the online dual-channel pricing decisions. This article also further analyzes the impact of changes in these two factors for manufacturers, retailers and channel' total revenue, with the purpose to provide decision-making reference for the enterprises' managers in the supply chain to develop optimal pricing strategies.

Service Failure, Service Recovery Activity and Satisfaction with Online Shopping Channel of Apparel Products

Unexpected consumer dissatisfaction emerges through rapid growth and expansion of on-line shopping channel. This research focused on the fashion online retail channels' negative aspect caused by service failure which possibly disappointed consumers. We also tried to seek for appropriate service recovery types based on frequently offered recovery types on-line. Data from college students were analyzed. Results indicate that fitting problem, insufficient information, product defect, inventory problem and slow delivery were the main service failure types in apparel e-shopping. Regression analysis identified that among these types, insufficient information, product defect, and slow delivery had significant influence on channel satisfaction after post recovery effort. Results also confirmed significant relationships between channel satisfaction and channel switching. Consumers perceived benefit level causes overall channel satisfaction level to rise while perceived risk leads to lower level of channel satisfaction. Choosing desirable service recovery activities in each service failure situations is necessary in order to raise consumer's channel satisfaction in online apparel shopping.

Private labels and national brands across online and offline channels

PurposeThe aim is to present a novel, empirical analysis of the competitive battle between retailer‐owned private labels (also known as store brands) and national brands (manufacturer‐owned) in the online retail market.Design/methodology/approachThe authors investigate competition between private labels (PL) and national brands (NB) across online and offline retail channels using data supplied by a multichannel supermarket chain describing a full year's purchase records for 2,742 households in 36 product categories. They analyse competition between these two types of brands by estimating the following competition indicators: market share, loyalty and conquesting power (a measure of the ability of a brand to attract new customers).FindingsThe results indicate that, whereas both PL and NB increase their loyalty online (versus offline), only the PL increases market share and conquesting power online. Several specific category‐level effects are also found.Research limitations/implicationsThe analysis is restricted to a specific retailer and to grocery products.Practical implicationsGiven the general improvement found for the PL in the online retail channel, together with the growing importance of online retailing, manufacturers should expect increasing retailer bargaining power. Since this improvement is not equal across categories, however, some manufacturers will have harder times than others.Originality/valueTo the best of the authors' knowledge, this is the first empirical paper to examine competition between PL and NB in the online channel. The database used is also highly unique in the sense that it is very unusual to obtain real purchase data for the same set of purchasers in both the offline and online retail channels.

The Impact of Shopping Orientations on U.S. Consumer’s Retail Channel Choice Behavior toward Luxury Goods Purchases*

The revenues generated by the luxury goods industry is estimated to reach $1 trillion by 2010 (Luxury Institute, 2007; Silverstein & Fiske, 2005). According to the Bain & Co., the luxury goods spending in the U.S. itself is projected to reach approximately $275 billion in 2011 of which is eight percent growth from the expenditure in 2010 (Lamb, 2011). In 2011, it is expected that the U.S. trend in increased market shares in the luxury goods industry will be mirrored in the global luxury economy and industry. Despite of the continued worldly economic stagnation in the first decade of 21st century, the growth of the luxury goods market has been observed in the emerging markets throughout the world especially China (Global Luxury Retailing, 2011; Lamb, 2011; The Luxe Groupe of Range Online Media, 2010). In this paper, we conceptualize luxury goods as those that have premium brand image, provide pleasure as a central benefit and utility or functional benefits as peripheral benefits based on the previous research (Kapferer, 1997; Vigneron and Johnson, 2004). With the technological advancement in the retailing sector, many luxury brands and retailers launched the multichannel retailing strategies to reach their target market through various retail formats and to provide more convenience of access to the brands and/or retailers. That practice resulted in the fact that many luxury brands have online presence of their luxury brand image. The aim of this study was to investigate the effect of consumer shopping orientation on repeat purchase behavior of luxury goods occurred via various online and offline retail venues in the U.S. multichannel retail environment. We examined the influences of six consumers’ shopping orientation factors on their repeat purchases of luxury goods made via eight different retail channels. Using a national purposive sampling technique, a total of 1,422 U.S. consumers whose annual household income is greater than $150,000 provided responses to our online survey. A self-administered questionnaire was developed based on the previous literature. The questionnaire consisted of three sections: 1) shopping orientation, 2) frequencies of luxury goods purchases made via various channels, and 3) demographic information. Multivariate data analyses including principal factory analysis and multiple regression analysis were employed to examine the research questions. The findings showed that various shopping orientation factors explained each channel in a unique manner. For instance, hedonic shopping orientation was significantly positively influenced the repeat purchase behavior in all eight retail channels. Bargain shopping orientation negatively impacted the repeat purchase behavior of luxury goods made via upscale-image retailers, while positively influenced the behavior via discount-image retailers. Fashion/brand conscious shopping orientation positively influenced the repeat purchase behavior via all four upscale image retailers as well as online and offline off-price retailers. In-home shopping orientation positively predicted the repeat purchase behavior via online retail channels for both upscale- and discount-image retailers. Convenience shopping orientation positively predicted the repeat purchase behavior via official websites of the brands, off-price retailers, and consignment stores. Utilitarian shopping orientation negatively predicted the repeat purchases via off-price retailers and consignment stores. For the luxury goods industry, this paper offers pragmatic knowledge about the relationships between consumers’ shopping orientation and their repeat purchases of luxury goods made via various retail channels, which may assist developing its marketing strategies. By shedding light on the U.S. affluent consumers’ repeat purchase behavior regarding luxury goods in the multichannel retail environment, this paper contributes the valuable insights regarding strategic directions to the luxury goods industry and theoretical understandings regarding the consumer shopping orientation to the academia.

Emerging dual channel system and manufacturer's direct retail channel strategy

The Internet has led many manufacturers to add direct online retail channels to their existing offline retail networks. Using both online and offline channels, manufacturers increase their market coverage and profits by customizing their products and services for the differing needs of customer segments using separate channels. Much recent research on channel management tends to focus on pricing strategies rather than analyzing channel strategies. This paper analyzes optimal channel strategies of manufacturers when they consider online stores as their new direct online channels, and it discusses some strategic implications of these channel strategies from the perspective of consumer heterogeneity and retail services.

Comparative carbon auditing of conventional and online retail supply chains: a review of methodological issues

PurposeThis paper seeks to examine the various stages in online and conventional retail supply chains in order to assess their relative environmental impacts. With reference to boundary issues, utilisation factors and carbon allocation, it seeks to highlight some of the difficulties in establishing a robust carbon auditing methodology.Design/methodology/approachAuditing issues are considered from the point of divergence in the respective supply chains (downstream of this point a product is destined either for conventional or online retailing channels, and will receive different treatment accordingly).FindingsThe paper explores methodological issues associated with carbon auditing conventional and online retail channels. Having highlighted the problems, it suggests resolutions to these issues.Research limitations/implicationsThe paper is mostly conceptual in nature.Practical implicationsThe approach outlined in this paper, once applied, allows the identification of inefficiencies in the respective retail supply chains.Originality/valueThe paper is the first to discuss carbon auditing in relation to upstream supply chain analysis for both conventional and online retail channels. Previous work has tended to focus on the last mile delivery.

Information asymmetry, pricing strategy and firm's performance in the retailer- multi-channel manufacturer supply chain

In this research paper, we assume a retailer-multi-channel manufacturer (with online and traditional retail channels) supply chain where both the multi-channel manufacturer and the retailer have private information about the state of consumer demand. In this setting, we examine the effect of an information sharing strategy on both firms' performance. Our results show that the multi-channel manufacturer always benefits from an information sharing strategy. When the product is highly compatible with the online channel, information sharing becomes much more valuable to the multi-channel manufacturer. On the other hand, the retailer's performance is not impacted by an information sharing strategy. Thus, a bargaining model is utilized to implement profit sharing for the multi-channel manufacturer and retailer so that an information sharing equilibrium can be reached. Based on our results, we derive optimal market strategies and identify probable paths of future research.

Factors of Consumer's Priority Preference Channel Choice Based Global Retail Environmental Changing in Online Retail Channel: T-Commerce Retail Channel

Factors of Consumer's Priority Preference Channel Choice Based Global Retail Environmental Changing in Online Retail Channel: T-Commerce Retail Channel

Product brand differentiation and dual‐channel store performances of a multi‐channel retailer

Purpose – The purpose of this paper is to provide a framework to help business marketers with online and traditional retail channels (multi‐channel retailers) to find the optimal branding strategy and market structure in order to maximize their profits.Design/methodology/approach – A game‐theoretic model is developed to determine the optimal branding strategy and market structure for the dual‐channel stores of a multi‐channel retailer.Findings – The paper demonstrates that an optimal branding strategy and market structure exists for the dual‐channel stores of a multi‐channel retailer. When a retailer uses multiple channels in parallel to sell its product, the optimal branding strategy is to employ as large as possible brand differentiation between the dual‐channel stores, particularly when the price is less sensitive for consumers and the market base size is larger. Furthermore, it is also found that the optimal market structure is the Stackelberg mode, especially when the product brands between the two c...

An empirical investigation of consumers' procurement of pharmaceutical products via online retail channels

AbstractThe procurement of pharmaceuticals from electronic channels is drawing widespread attention from marketing decision makers, public policymakers, and the popular media. The focus on online retail channels for pharmaceuticals may be, in part, attributable to the potential risks and safety issues that underlie consumers' self‐initiated pharmaceutical acquisition and consumption decisions. Clearly, there exist an unprecedented number of consumers employing this nontraditional channel for procuring both over‐the‐counter (OTC) and prescription pharmaceuticals in the U.S. This study explores the potential impact of consumers' cognitive characteristics on their decision making as it relates to procuring pharmaceutical products via online retail channels. The results of the study indicate that both powerful others health locus of control and objectivism determine the propensity to procure pharmaceuticals via electronic retail channels. Moreover, health value is identified as a portentous moderator of the relationship between consumers' health locus of control, objectivism, and pharmaceuticals procurement via electronic retail channels. The implications of the findings and recommendations for future research are offered, as well. © 2009 Wiley Periodicals, Inc.

Coordinating a Supply Chain With a Manufacturer-Owned Online Channel: A Dual Channel Model Under Price Competition

We consider a dual channel supply chain in which a manufacturer sells a single product to end-users through both a traditional retail channel and a manufacturer-owned direct online channel. We adopt a commonly used linear demand substitution model in which the mean demand in each channel is a function of the prices in each channel. We model each channel as a newsvendor problem, with price and order quantity as decision variables. In addition, the manufacturer must choose the wholesale price to charge to the independent retailer. We analyze the optimal decisions for each channel and prove the existence of a unique equilibrium for the system. We compare this equilibrium solution to the solution for an integrated system, in which the manufacturer owns both the online store and the retailer. To enable supply chain coordination, we propose two contract schemes: a modified revenue-sharing contract and gain/loss sharing contract. We show that, in cases where the retail channel has a larger market than the online channel, such contracts enable the manufacturer to maintain price discrimination, selling the products in different channels at different prices. Finally, we perform a comprehensive numerical study to consider the impact of the model parameters on the equilibrium and to demonstrate the performance of the proposed coordination contracts. We conclude that coordination is most critical for products which are highly price sensitive and for systems in which the online and traditional retail channels are not viewed as close substitutes.

The Evolution of B2B E-Services from First Generation E-Commerce Solutions to Multichannel Architectures

Although e-services have been recognized for their contribution to strengthening customer relationships and fostering customer loyalty, prior research is heavily skewed toward the field of business-to-consumer interactions and online retail channels. This article explores the evolution of e-services in the business-to-business domain. Based on the case study of ETA SA, a Swiss manufacturer of watch movements and components, it identifies three stages of increasing electronic interaction with customers. The company pioneered online ordering of watch spare parts based on a first generation e-commerce solution and subsequently introduced a comprehensive customer service portal. Our research suggests that moving from the e-commerce solution to the customer process portal involved a significant extension of the e-service portfolio (service innovation), whereas the subsequent stage introduced an additional electronic channel (channel innovation). Every stage in this evolution path forces companies to substantially re-architect their interorganizational process and system linkages. From the experiences of ETA SA, we conclude that a service-oriented multichannel architecture makes it easier to cope with the growing number of e-services and the complexity of serving multiple electronic channels.