Retail Channel Research Articles

WeStore or AppStore: How we shop differently in Mobile Apps vs. Social Commerce

Social commerce is rapidly growing and attracting new customer segments. This channel is different from traditional retail channels in that it relies on social media platforms for product discovery and purchase. We examine customer behavior and search patterns in an emerging social commerce channel, namely WeChat mini-programs, and in retailers' native apps. We show that customers' fixed and marginal search costs and preferences differ across these two channels. Our research constitutes the first attempt to study customer behavior differences between traditional mobile apps and social media-based channels. Rather than focusing on customers' final purchases, we analyze customers' entire shopping journey using structural search models to quantify their search costs and price sensitivity across the different channels. Previous literature in operations management has estimated traditional discrete choice models to recover customers' cost parameters based on customers' purchase decisions. Instead, we use a sequential search model that characterizes customers’ entire shopping journey. We estimate fixed search costs, marginal search costs, and preferences in each channel and uncover differences in customers' search and purchase behavior across channels. We find that WeChat customers have higher fixed search costs yet smaller marginal search costs compared to App customers. Moreover, customer characteristics such as their user level and time of search impact search costs. Fixed and marginal costs are higher for customers with higher user levels on the WeChat channel. Marginal search costs are higher for customers with higher user levels in the App channel. We propose two channel-specific strategies that leverage customers' search cost differences across channels. The first strategy is to send friend referral discounts to lower fixed search costs in the WeChat channel. The second is to send search-triggering coupons to induce App customers to continue their search. Both strategies can significantly increase conversion rate and profit for online retailer JD.

New Retail a Game Changer for Sustainable Development

The concept “new retail” in e-commerce is to establish an offline channel and integrate it with the online retail channel. Retailing in India is one of the pillars of its economy and accounts for about 10 percent of its GDP. Indian retailing is dominated by small stores and street stands, known as the “unorganized” sector. 92% of all retailing by value falls into this sector. As of 2003, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers came into being. As much as 90 per cent of India's USD 700 billion retail market still is unorganized, made up mostly of neighborhood kirana stores selling groceries and other sundries. These stores faced losses due to the growth of organized retail and now due to the Pandemic but still 12 million strong Kirana stores of India, remain strong as they offer ubiquitous and fast delivery of goods across the length and breadth of the country. This network cannot be matched by any of the large retail giants. Unveiling what is termed as a $700 billion opportunity the big retail giants are now tying up with Kirana stores and even the Govt of India is integrating them in the E-Commerce model, for example Reliance Jio and Facebook Inc. joined hands to power Reliance Retail’s JioMart. Soft-launched in December 2019 as ‘Desh Ki Nayi Dukaan’. This model adopted by Reliance Company is what is termed as New Retail or New commerce. ‘New retail’, term was coined by Alibaba founder Jack Ma to denote the blurring boundaries between online and offline retail. The main purpose of new retail is to completely transform the unorganized retail market, which accounts for 90% of India’s retail industry. Integrating offline with online is what is termed as New Retail which is creating a critical intersection between the value proposition for the consumer as well as the merchant.This research paper is an attempt to analyze all the developments, the practicing of new retail , its contribution to the country’s development.

Optimal channel decision of retailers in the dual-channel supply chain considering consumer preference for delivery lead time

Facing competition from manufacturers' online direct channels, how retailers make sales channel decisions to increase consumer stickiness has become the core concern of the industry and academia. Empirical research showed that delivery lead time is a key factor that affects consumers' preference for online channels. To analyze the impact of consumer delivery time preference on channel selection and pricing strategy of retailers, consumer delivery lead time preference function was improved from a linear function to an exponential function and consumer demand under the mixed dual-channel supply chain of manufacturer and retailer was derived. Then, the Stackelberg game models under different channel strategies of retailer were established and solved. Results show that consumer preference for delivery lead time has four implications on the channel decision of retailers under manufacturer encroachment in the dual-channel supply chain. First, the dual retail channels strategy is the optimal choice for retailers, and the profit margins that a retailer obtains from dual retail channels supply chain and single online retail channel supply chain will increase as consumers' delivery lead time preference coefficient increases. Second, the optimal pricing of online retail channel and offline retail channel is positively related to consumers' delivery lead time preference coefficient. By contrast, the optimal pricing of online direct channel is negatively related to consumers' delivery lead time preference coefficient. Third, the optimal pricing of online retail channel is higher than that of offline retail and online direct channels. Fourth, a retailer and a manufacturer can adopt a compensation-based whole price contract to address the conflict brought about by the optimal channel choice of the retailer. This study introduces consumer delivery lead time preference into retailer channel decision making and provides a theoretical reference for retailer's mixed channel construction in practice.

Chaotic Behaviors in a Nonlinear Game of Two-Level Green Supply Chain with Government Subsidies

In this paper, a two-level green supply chain composed of a manufacturer and a retailer is taken as the background. Considering the consumer’s double consumption preference and the manufacturer’s green product R&D investment, a differential game model of the green supply chain under the government cost subsidy strategy is constructed. Firstly, the equilibrium points of the system are solved and their stability is discussed and analyzed. Secondly, the dynamic evolution process of Nash equilibrium under the parameters of green degree, green preference coefficient, retail channel preference coefficient, coefficient of the sensitivity of price, and adjustment speed are described by numerical simulation. The results show that the two ways of a system entering chaos are Flip bifurcation and N-S bifurcation, respectively, by 2D bifurcation graph, and it is also verified in 1D bifurcation diagram. When the bifurcation parameters are small, the system maintains Nash equilibrium stability. If the green degree of products is increased, the green preference coefficient will also increase; on the contrary, the retail preference coefficient will decrease. Research and development cost subsidy policy can effectively improve the green degree of products and increase the sales volume of products, so as to improve the profit of supply chain members.

A Study On Customer Satisfaction in E-Retailing with Special Reference to Consumer Electronics and Appliances: An Analytical Research on Indian Perspective

A Study On Customer Satisfaction in E-Retailing with Special Reference to Consumer Electronics and Appliances: An Analytical Research on Indian Perspective

Demand Model Development Considering Supply Chain Disruption

The concept of distributes and selling products through retailers (offline channels) and also online channels is called a dual-channel supply chain (DCSC). In DCSC, one manufacturer manages the online channel and distributes the product to one independent retailer. Disruptions are all activities that disrupt the supply chain activities so that the supply chain cannot operate normally. Another major aspect to be considered in DCSC is the customer shift in preferences because with adding an online channel, the online channel has several advantages. This paper’s objective is to investigate the effect of supply chain disruption on demand in the online and offline channels. The customer knows beforehand that there is a disruption in the supply chain before even try to purchase the product in DCSC, therefore it will affect the customer preferences that will also affect the channel demand. From a numerical example, it is shown that the retail channel is suffering more than the online channel. The greater the probability of disruption and the proportion of disruption, the demand on the offline channel will decrease.

Exploring young consumer's decision‐making for luxury co-branding combinations

PurposeThe purpose of this paper is to identify the realistic trade-offs young consumers make when evaluating luxury co-branding combinations based on signalling theory.Design/methodology/approachConjoint analysis was employed to evaluate the relative impact of four major attributes (i.e. brand combinations, retail channels, uniqueness and price) on consumer desirability for luxury co-branding combinations. The data were analysed using desirability indices.FindingsBrand combinations, uniqueness and price significantly impact consumer desirability of luxury co-branding combinations. The luxury brand and sportswear combination results in the highest desirability when price is more similar to the sportswear constituent and participants perceive that the collaboration as exclusive.Practical implicationsThe results suggest that luxury brands need to consider the partnering brand's retail format primarily for co-branding strategy. Luxury brand collaborations with sportswear and premium priced streetwear brands are more likely to result in higher desirability among consumers compared to collaborations with fast fashion and mass-market brands. Additionally, uniqueness may not be effective as a point of differentiation in cases where luxury brands cannot guarantee a single yearly collaboration.Originality/valueThe decision to use existing brands for the fictitious combinations developed more sensible scenarios for respondents. In addition, rather than discrete questions, attribute-based combinations provide a more realistic depiction of consumers' decision making on luxury co-branding. Finally, the results provide marketing practitioners with practical directions for future development of fashion luxury co-branding strategy.

Competitive Strategies for Wine Cooperatives in the German Wine Industry

The wine industry is significantly affected by globalization and changes in consumption habits and shifts in lifestyle, which lead to changes in the market environment and intensity of competition in the wine markets. Overall, wine cooperatives have a market share of more than 40 % in Europe. In Germany, they account for around one third of the total wine production. The decreasing number of wine cooperatives and their members leads to the assumption that wine cooperatives have difficulties adapting to the different market environment and though, need to select and implement competitive strategies. The aim of this paper is to identify and develop competitive strategies for wine cooperatives in the German wine industry. Therefore, the external forces affecting competitive rivalry in the wine industry are being evaluated for wine cooperatives in Germany. A qualitative approach has been applied including in-depth interviews with managing directors and chairmen of the board (n=15). Data were transcribed verbatim and content analysed. Results showed that the intensity of rivalry among existing competitors is high. Bargaining power of wine cooperatives towards buyers and suppliers strongly depends on their size. However, generally the bargaining power of retailers is high, although this depends on the retail channel (discounters, food retail, specialized retail, specialized wholesale, gastronomy). Five main strategy dimensions emerged: (1) the cost leadership and cost focus strategy, (2) the differentiation and differentiation focus strategy, (3) collaboration among producers, (4) offering additional services, and (5) options for improved membership relations and increased youth involvement.

Coordination Contracts of Dual-Channel Supply Chain Considering Advertising Cooperation

To study the impact of advertising cooperation on the decisions of dual-channel supply chain, a dual-channel supply chain system consisting of a single manufacturer and a single retailer is considered. The manufacturer can sell products to customers either through a direct marketing channel or through a traditional retail channel. This paper analyses the level of advertising investment and supply chain profits of centralized and decentralized dual-channel supply chains based on a Stackelberg game. Then, the decision models of dual-channel supply chain under different contracts are constructed, and how manufacturers can optimize the profits of both sides through an effective coordination mechanism is analyzed. The research results show that the improved advertising costs and revenue sharing contract can perfectly coordinate the dual-channel supply chain system. Numerical experiments illustrate the impacts of parameters on the optimal decision results.

The Impact of Consumers’ Peer-Induced Fairness Concerns on Mixed Retail and E-Tail Channels

With the rapid development of e-commerce, online retailing has become an important part of the market. In order to improve market competitiveness and increase market share, more and more retailers have opened both regular offline channel and online e-tail channel to sell products. Then how to price becomes an urgent problem for upstream manufacturers and dual-channel retailers when there is price competition between regular channel and e-tail channel, especially when consumers have peer-induced fairness concerns. However, linking consumers’ behavioral factors such as fairness concerns to pricing decisions of mixed retail and e-tail channels draws little attention in the literature on supply chain management. This paper incorporates “consumers’ peer-induced fairness concerns” (CPFC) into pricing decisions in a dyadic supply chain, where dual-channel retailer obtains products from manufacturers and then sells products to consumers through both regular channel and e-tail channel. We use game-theoretic models to analyze the equilibrium pricing strategies under the setting with “symmetry consumers’ peer-induced fairness concerns” (SCPFC) and with “asymmetry consumers’ peer-induced fairness concerns” (ACPFC), respectively. Detailed comparisons and numerical analysis are further conducted to examine the impacts of different types of CPFC on equilibrium pricing strategies and profits.

Service Sales Corporation: The Wholesale Challenge

Ahmed Hussain had just concluded an intense phone call with one of the biggest wholesalers in the central region. The wholesaler had made it clear to Ahmed that he would not use his current monthly budget to buy from Service Sales Corporation (SSC) unless Ahmed matched the offer being made by one of his competitors in terms of discounts on purchase. Ahmed had been at SSC for well over 5 years, he came back to Pakistan after studying at Carnegie Mellon University. He had been appointed as country head wholesales just over a year ago. However, his previous education and experience had not prepared him for such a challenge in the unstructured footwear industry of Pakistan (Ahmed had studied engineering, and this was his first job in a sales role). The case focuses primarily on the power of channel partners within an industry. The importance of the wholesaler in the context of SSC is discussed, and their role within the value chain is elaborated upon. The objective is for the class to assess the business situation presented before them in the case and evaluate the options under discussion. Ahmed is depicted as being under severe pressure to meet his goals and improve the performance of the wholesale channel. He faces competition from the SSC retail channel as well as other large players in the market. The situation is considered so serious that key executives within the company are considering getting out of the wholesale channel and focusing on retail only. Ahmed and his team, however, are not willing to let go of 30 per cent of the company’s revenues and have proposed bypassing the wholesalers and selling directly to private independent non-exclusive retailers. Another option put forward is to launch a new brand into the wholesale channel at a lower price point.

Effect of Capital Constraint in a Dual-Channel Supply Chain

Capital constraint is a significant factor that mainly restricts the development of small- and medium-sized enterprises. This paper explores the channel strategy and pricing decision in a dual-channel supply chain, which consists of one supplier and one retailer. Adequate and inadequate capital constraints for the supplier are distinguished by determining whether open the retail channel to sell. The observations offer managerial insights into supply chain member. First, the results indicate that the capital constraint is a key factor affecting channel strategies and pricing decisions. With the increased value of capital constraint, the wholesale price of offline channel and the selling price of online channel firstly decrease and then remain constant. Second, the results demonstrate that, with capital constraint, the supplier pays more attention to consumers’ brand loyalty if it chooses to open the online channel only. Additionally, the price-sensitivity parameter has no effect on the strategy of opening only the offline channel. Moreover, when the channel competition is too intense, the supplier will choose to only open the online channel strategy and increase the online selling price if the capital is insufficient.

Optimal Subsidies for Development Supply Chains

Problem definition: When donors subsidize products for sale to low-income families, they need to address who to subsidize in the supply chain and to what extent and whether such supply chain structures as retail competition, substitutable products, and demand uncertainty matter. Academic/practical relevance: By introducing and analyzing development supply chains in which transactions are commercial but subsidies are needed for affordability, we explore different supply chain structures, with product substitution and retail competition motivated by a field study in Haiti of subsidized solar lantern supply chains. Methodology: We incorporate product substitution, retail competition, and demand uncertainty in a three-echelon supply chain model with manufacturers, retailers, and consumers. This model has transactions among the donor, manufacturers, retailers, and consumers as a four-stage Stackelberg game, and we solve different variations of this game by using backward induction. Results: The donor can subsidize the manufacturer, retailer, or customer as long as the total subsidy per unit across these echelons is maintained at the optimal level. Having more product choice and having more retail channel choice can increase the number of beneficiaries adopting the products; this increase becomes more pronounced as demand becomes more uncertain. Managerial implications: Donors must coordinate across different programs along the entire supply chain. They should look for evidence in their collective experience of more beneficiaries when subsidizing competing retailers selling diverse substitutable products.

COVID-19, The Ideal Opportunity to Move into the Omni-Channel Retailing

Since the emergence the Internet, the retail sector is experiencing one of its most disruptive stages. Both academics and business practitioners have been betting for years on the importance of Omni- Channel Retailing (OCR). However, for many retailers OCR was a missing subject and they did not count on the great turning point that has occurred, the COVID-19. The coronavirus pandemic has boosted online retail sales, which are estimated to have grown by 209%. Those retailers that did not have the online channel will have suffered significant losses in their income statements. The COVID- 19, while a great challenge for retailers, is also a great opportunity. Customers have drawn a new normal in their decision-making, where the Internet and the smartphone play a major role, without physical stores losing their leading position. With these considerations in mind, the researcher insists on the importance of the fashion industry in this turbulent period and proposes a series of guidelines for retailers to emerge stronger from this situation and adapt without major problems to the new normality. It is up to the top management of retailers to restructure their business model with the current omni-shopper in mind, and how to implement that business model without making the sales force feel threatened.

Modernizing Retailers in an Emerging Market: Investigating Externally-focused and Internally-focused Approaches

This paper studies the impact of business modernization on the sales performance of traditional retailers. We define modernization as adopting tangible structures and business practices of organized retail chains (for example, exterior signage with store name and logo, or a database to record product-level information). To address our research question, we implement a randomized field experiment in Mexico City with 1148 traditional retail firms. Our sample is randomized into three groups: 385 firms that we externally modernize in ways that are visible to customers; 383 firms that we internally modernize in ways that are not visible to customers; and 380 firms form a control group. We find a significant and persistent main effect of modernization on sales: firms in both treatment groups increase monthly sales by 15% to 19%, even 24 months after study recruitment. In terms of novel mechanism evidence, we find that externally-modernizing firms improve their store-level branding, while internally-modernizing firms strengthen their product management. These results have important implications for multinational managers who distribute products through traditional retail channels, and for policymakers interested in improving firm performance in the retail sector of emerging markets.

The Effect of O2O Retail Service Quality in Supply Chain Management

The present study focuses on a single-vendor, single-buyer supply chain model for a single type of product with upgraded service provided to the buyer by the vendor. Vendors often increase their profit by providing a lower quality of a particular product. In this study, an advanced supply chain model is developed to increase service in the presence of an unreliable vendor and an online-to-offline (O2O) channeling system. The vendor provides lower quality items to the customer, even though they had committed to providing a certain quality product, in order to increase their profit. For more realistic results, demand is considered to be price-, quality-, and service-dependent. To advertise and sell the products, the manufacturer uses an online system, which the buyer also uses to choose and order the product, where the particular product is delivered to the customer by a third (offline) party; that is, the concept of an O2O retail channel is adopted to improve the service level of the supply chain management (SCM). To control the out-of-control state and improve the production quality, investment is used. Contrary to the literature, service is considered to be constrained, which makes the model more realistic. A classical optimization technique is used to solve the model analytically and a two-echelon supply chain model is obtained under the advanced O2O retail channel, along with optimized profit, shipment volume, selling price, ordering cost, service, back-ordered price discount, lead time, and safety factor values. Some numerical examples and a sensitivity analysis of the key parameters are provided, along with graphical representation, in order to validate the model.

JUUL sales recovered after self-imposed flavor ban.

Although the company withdrew some flavored products from stores in November 2018, its sales soon surpassed levels from the period preceding its self-imposed flavor ban as consumers switched to the menthol/mint and tobacco flavors that remained on the shelves, say the American Cancer Society researchers who conducted the study. The JUUL flavors removed include mango, creme brulee, fruit medley, and cucumber. Electronic cigarettes (e-cigarettes) were initially intended as a less harmful product to help adult smokers of tobacco cigarettes quit, but they quickly became popular among teens as companies such as JUUL began marketing to that audience through social media and youth-oriented events, public health experts say. Among other things, many teens say they vape because they like the flavor or for social reasons. For the study, Alex Liber, MSPH, a senior scientist with the American Cancer Society's economic and health policy research program, and his colleagues analyzed Scantrack data from The Nielsen Company regarding e-cigarette sales in drug, convenience, and food stores from January 2015 to October 2019. From 2017 through 2018, JUUL sales grew along with the share of fruit-flavored e-cigarettes. The latter increased from 12.9% of sales in January 2017 to 33.3% of sales in October 2018. At the same time, sales of tobacco-flavored e-cigarettes dropped from 39.7% to 16.6% of sales. When JUUL voluntarily removed fruit flavors in November 2018, sales of fruit-flavored products declined to 9.1% across Nielsen-tracked retailers by April 2019, while the share of menthol/mint-flavored products rose from 33% to 62.5%. During the same period, tobacco flavor sales grew from 16.6% to 22.3%. JUUL captured approximately 91% of this growth in tobacco sales and all of the growth in menthol/mint sales, surpassing their previous maximum within 12 weeks. Furthermore, because fruit-flavored products continued to be offered by other e-cigarette manufacturers, sales for the category began to increase. They grew to $60.6 million or approximately 15.8% of sales by September 2019, driven by fruit-flavored sales for the NJOY brand, maker of the popular disposable e-cigarette the NJOY Daily. However, earlier this year, NJOY said that it too would voluntarily halt sales of fruit-flavored products. According to the Nielsen data, e-cigarette sales (including hardware) peaked in August 2019 at $441 million per month. Although researchers cannot yet say why sales began to slow after that peak, reasons could include customer response to media reports regarding the outbreak of vaping-related illnesses and announced bans on the sales of all or some e-cigarettes by governors in several states. Mr. Liber concludes that companies that impose their own restrictions are unlikely to improve public health. “It is highly unlikely that overall youth use declined given the short-lived impact on sales trends for JUUL cartridges and the rapid recovery of flavored cartridge sales within the very retail channels that should have seen the largest declines from JUUL's actions,” he said. In addition, if the government exempts some e-cigarettes from a flavor regulation and not others, the market will fill the void, he adds.

Channel choice for an independent remanufacturer considering environmentally responsible consumers

This paper studies the channel choice of an independent remanufacturer who considers whether to add a direct channel to its retail channel in the presence of environmentally responsible consumers. Two scenarios, depending on whether there is competition between the remanufacturer and the manufacturer with new products, are explored. When there is no competition, we find that (i) adding a direct channel lowers the wholesale price; (ii) a higher proportion of green consumers, attention degree of the remanufacturer's green image, or cost savings per remanufactured product strengthens the remanufacturer's motivation to add a direct channel; (iii) the remanufacturer has a low incentive to add a direct channel if the total surplus of the retail channel or extra fixed cost of introducing direct channel is high; (iv) the direct channel addition hurts the retailer if the acceptance degree of direct channel is not low. However, when there exists a competition, we find that (i) the competition can influence how cost savings and acceptance degree of direct channel affect the remanufacturer's channel choice; (ii) the remanufacturer and the retailer can achieve a win-win situation under dual channels if the acceptance degree of remanufactured products or direct channel is low, or their standard deviations are high; and (iii) adding a direct channel increases the remanufacturer's ability to resist uncertainty of consumers' behaviors.

Differential Pricing and Emission Reduction in Remanufacturing Supply Chains with Dual-Sale Channels under CCT-Mechanism

In order to make optimal decisions for pricing and emission reduction, a remanufacturing supply chain system with dual-sale channels is investigated. With regard to the preferences of consumers for different channels and carbon cap-and-trade mechanisms, profit-maximization models are developed on supply chain members and systems in decentralized and centralized cases. Based on a backward induction, the corresponding formulae for decision variables are obtained. Then the effect of the industry emission control coefficient is analyzed and the optimal decisions of two cases are compared. Finally, the coordination mechanism and numerical analysis are presented. The result indicates that: (1) As the free carbon allowances granted by the government to the manufacturer increases, the investment in carbon reduction from the manufacturer will increase. As the industry emission control coefficient increases, the carbon emissions per product and the prices of new and remanufactured products will decrease, while the demands of the new and remanufactured products and the profits of supply chain members and systems will increase. (2) As the direct sale channel preference coefficient increases, the profits of the manufacturer and the system will increase while the retailer’s profit will decrease. Correspondingly, the carbon emissions of unit product will decrease, and the sales of the direct sale channel will increase while the sales of the retail channel will decrease. (3) The decision in the coordinated case not only ensures emission reduction and system profit to reach the level of the centralized case, but also raises the profits of supply chain members in the decentralized case. Therefore, it is preferable to other decisions. (4) As the carbon trading price increases, the emission reduction investment from the manufacturer will increase while the profits of the supply chain and its members will increase.

Competition in dual-channel supply chains: The manufacturers' channel selection

Innovative selling channels have brought about opportunities as well as challenges for upstream manufacturers. The past few years have witnessed both the success and failure of manufacturers with different channel strategies. To explore the rationale of different channel strategies in various contexts, we develop a model to analyze a manufacturer's channel selection decision among three channel strategies, i.e., a direct-channel strategy, a retail-channel strategy, and a dual-channel strategy consisting of both direct and retail channels. The model rests on the channel differentiation in terms of consumers’ channel preferences and operating costs of retail and direct channels. Specifically, we incorporate the action of a competitor and track down its influence on the focal manufacturer's channel preference. Our research clarifies the role of competition in the market and offers insights into the competitive nature of business in real life. Results show that the manufacturer's channel preference depends not only on the channels’ operating costs and consumers’ channel preferences but also on the competitor's channel strategy. We find that symmetric manufacturers can adopt asymmetric strategies as Nash equilibria and also that there are situations where no Nash equilibrium exists. We characterize the Nash equilibria in the channel selection game based on the exogenous parameters of the model.