Retail Channel Research Articles

Sales mode selection strategic analysis for risk-averse manufacturers under revenue sharing contracts

This paper considers a sales mode selection problem under revenue sharing contracts between resale and agency modes for risk-averse manufacturers with traditional retail channel, direct selling channel, and e-commerce platform channel. By considering the factors including price competition intensity, market share, revenue sharing ratio, commission rate, and degree of risk aversion, we construct leader-follower game models with manufacturers as leaders and traditional retailers and e-commerce platforms as followers. To obtain optimal solutions, we discuss conditions to ensure the upper and lower models to be convex and then give the optimal strategies for all members in the network. Through numerical experiments, we analyze the involved parameters’ impact on sales mode selection strategy and the changing trends of each member's optimal pricing and profit under different sales modes. The numerical results reveal the following revelations: The manufacturer should choose the agency mode when the commission rate is low and the direct selling channel has a large market share. If both the commission rate and degree of risk aversion are high, direct selling channels have a low market share, and price competition intensity is weak, the manufacturer should choose the resale mode. The degree of risk aversion has an effect on each member’s optimal decision. Regardless of which sales mode the manufacturer chooses, the optimal price of each member decreases as the degree of risk aversion increases. Under certain conditions, the manufacturer’s choice of agency mode can create win-win situations with supply chain members.

Cost and Marketing Channels of Khmer Craftsmen's Brown Palm Sugar Production in Chau Lang, Vietnam

The current investigation was carried out both quantitative and qualitative methods in Chau Lang of the Tri Ton district where it is known that 65% of the village's families are Khmer. With the aid of in-person interviews using a pre-tested questionnaire, a semi-structured interview schedule, and an open discussion method, primary data were gathered for the study from 250 sampling observations from various stakeholders, including 105 farmers and 145 intermediaries in various channels. The findings showed that the average cost of production for one kilogram of palm sugar was 5,302 VND. There are three main channels in the marketing chain: Farmers, Middlemen, Wholesalers, Retailers, and Consumers in Channel 1, Farmers, Wholesalers, Retailers and Consumers in Channel 2, and Farmers, Retails, and Consumers in Channel 3. Channel 3 has the greatest marketing efficiency, at 19.52%, followed by Channels 2 and 1, at 18.36% and 15.76%, respectively. Additionally, Channels 1 and 2 have lower monopoly index values than Channel 3, suggesting trader dominance in the marketing of palm sugar products. It also demonstrates how little influence artisans have on the product price. An enterprise that aids artisans in selling palm sugar, Chau Lang village, must grow. In order to encourage the Khmer to continue working in the village as they have done for generations, it is important to find how to help these households and boost the income from palm sugar production. Keywords: Brown Palm Sugar, Production Cost, Marketing Channel, Craftsmen.

Pricing and advertising in dual-channel supply chains: real applications for coffee processing and distribution companies

ABSTRACT In the present research, the local and global dynamic advertising and competitive pricing are considered in the form of an integrated differential game model in the dual-channel supply chain of a coffee processing company. Furthermore, integrated mathematical analyses are presented to examine the equilibrium paths of the game. One of the main novelties of this study is to consider the state variable as the amount of credibility that is given to the customer by the global advertising of the manufacturer. According to the results, the equilibrium price of online sales is higher than the retail price. Furthermore, the advertisement volume of the manufacturer in the online channel is more than the local advertisement volume of the retailer, and the advertisement volume of the retailer is more than the global advertisement volume of the manufacturer. In this case, the profit of the manufacturer in the online channel is always more than the profit of the retailer in the traditional retail channel. Therefore, activities of the direct online channel can lead to an increase in profits, however, the conflict of channels could reduce the demands through the traditional retail channel. The sensitivity of equilibrium levels of optimal variables are also analyzed.

Blockchain adoption and channel selection strategies in a competitive remanufacturing supply chain

Environmental protection and economic benefits have attracted original equipment manufacturers (OEMs) and third-party remanufacturers (TPRs) enter into the remanufacturing industry. Considering that consumers have a low willingness to pay for remanufactured products, OEMs tend to apply blockchain technology to disclose more product information to consumers to improve their purchase intention. Along this line, we investigate a supply chain consisting of an OEM, a TPR and a retailer, and examine four models depending on whether the OEM adopts blockchain technology or not, and whether the OEM sells products directly to consumers (direct channel) or indirectly by the retailer (retail channel). In this paper, a Stackelberg game is formulated to obtain the optimal strategies for blockchain technology adoption and distribution channel selection. Analytical results show that the OEM should adopt blockchain technology only when consumers’ value discount for remanufactured products produced by the OEM is high and the unit cost of adopting blockchain technology is not high under both direct and retail channels. In specific situation, the direct channel is always advantageous to the OEM whether or not blockchain technology is adopted. In addition, when consumers’ value discount for remanufactured products is not low and the unit cost of adopting blockchain technology is not high, blockchain technology adoption is beneficial to the environment under both direct and retail channels.

Altruistic production and distribution planning in the multilayer dual-channel supply chain: Using an improved NSGA-II with lion pride algorithm

To achieve long-term stable development of the supply chain with online and retail channels, manufacturers may employ altruistic pricing strategies to increase retailers’ interests while considering their own interests. Therefore, this work creates a mixed-integer linear programming (MILP) model for planning altruistic production and distribution for a manufacturer in a multilayer dual-channel supply chain, while maximizing the total profit of both the manufacturer and retailers and the order fulfillment rate from the manufacturer to retailers. Different from previous works using fixed altruistic pricing, this model allows flexible altruistic pricing. Since MILP is NP-hard, this work further solves this problem by an improved nondominated sorting genetic algorithm II (NSGA-II) with lion pride algorithm (LPA), in which the NSGA-II is commonly used for solving bi-objective optimization problems; the LPA adopts the slope index measure to resolve the difficulty in distinguishing the solutions with similar performance at the later stage of the NSGA-II; and multiple crossover and mutation operators are integrated to increase diversity of solutions. Simulation results show that as compared with the selfish pricing strategy, the proposed altruistic pricing strategy significantly increases the proportion of the profit of retailers, so that the channel conflict between the manufacturer and retailers can be alleviated.

Research on Coordination Strategy of Dual Channel Supply Chain for Information and Service Sharing

E-commerce channels are favored by consumers with their low price strategy and cost advantages, while physical retail channels play games in the competition with efficient services. Each has its own advantages, which makes consumers flow between different channels, leading to conflicts between channels. This paper analyzes the dual-channel supply chain cooperation mode of information sharing and service sharing, explores the coordination model based on price compensation strategy, and discusses how the manufacturer's e-commerce channel and retailer's physical channel cooperate through the coordination incentive model based on price compensation strategy to achieve the total profit realized under centralized decision-making, and through service sharing to indirectly redistribute profits, achieving win-win cooperation between both parties.

Sales Mode Selection Strategic Analysis for Manufacturers on E-Commerce Platforms under Multi-Channel Competition

This paper considers a sales mode selection problem between resale and agency modes on e-commerce platforms for a manufacturer with traditional retail channel, direct selling channel, and e-commerce platform channel. By considering the factors price competition, market shares, and commission rate, we construct two leader-follower models with the manufacturer as a leader and traditional retailer and e-commerce platform as followers. To obtain optimal solutions, we discuss the conditions under which the upper and lower models are convex and then give optimal strategies for all members in the network. Through numerical experiments, we analyze the impact of price competition intensity, market shares, and commission rate on mode selection strategies and the changing trend of each member’s optimal pricing and profit under different sales modes. The numerical results reveal the following revelations: If the market share of the traditional retail channel is lower than the direct selling channel, the manufacturer should choose the agency mode when the market share of the direct selling channel and price competition are lower or when the market share of the direct selling channel together with the price competition and the commission rate is higher; otherwise, the manufacturer should choose the resale mode. If the market share of the direct selling channel is lower than the traditional retail channel, the manufacturer should choose the agency mode when the price competition is weak and choose the resale mode when the price competition is strong. Under certain conditions, a win–win situation can be achieved no matter how the manufacturer chooses.

Scheduling vegetable sales to supermarkets in Europe: The tomato case

This article analyzes the temporal programming of sales for a horticultural marketing company, e.g. a cooperative. The empirical study references the European tomato market, where most of the production is sold through the retail channel dominated by large distribution chains. We study the marketing schedule for an individual company, or even a prominent farmer, using a modified Markowitz model, assuming that his decisions do not affect the balance of market prices. As a result, this model can manage risk and improve decision-making. The data also provide information on the risk borne by marketers depending on their sales calendar, which often depends on their geographic location.

Pricing, financing and channel structure for capital-constrained dual-channel supply chains with product heterogeneity

We study the pricing, financing, and channel structure for a dual-channel supply chain in which a capital-constrained manufacturer sells two heterogeneous products through a retailer’s retail channel and its own direct channel. In line with industry practice, we explicitly examine the efficacy of three financing strategies – that is, early payment financing (EPF), bank financing (BF), and their portfolio financing (PF) – from the perspective of the manufacturer. Our result shows that whether the BF strategy causes the retailer and manufacturer to set a higher (retail or direct) price than the EPF strategy does closely depends on the early payment discount factor and product heterogeneity level. Interestingly, we find that under some conditions (e.g., when product heterogeneity level is not low or the acceptance level of online channel is not high), the manufacturer prefers to choose the EPF strategy, even when the early payment discount factor of the EPF strategy is higher than the interest rate of the BF strategy. We further find that when the early payment discount factor is smaller than the bank loan interest rate, the manufacturer still prefers the BF strategy if the amount of capital needed by the manufacturer is small. In addition, we show that both competitors can benefit from a higher product heterogeneity level, which is not affected by the manufacturer’s capital status. Our finding provides implications on how the manufacturer chooses a proper channel structure to sell its heterogeneous products, and highlights the effect of the manufacturer’s initial capital and the difference in production costs on the selection of channel structure. • We study the pricing, financing, and channel structure for a capital-constrained dual-channel supply chain. • We explicitly examine the efficacy of the proposed three financing strategies used in reality. • We find that under mild conditions the manufacturer prefers to choose the EPF strategy. • We provide implication on how the manufacturer to choose a proper channel structure to sell its heterogeneous products.

Enhancing the online buyer perception of consumer experience products in a dual-channel supply chain: A new role of free-riding

Asymmetries in consumer perceptions about the quality of a consumer experience product are prevalent between online (direct) and offline (brick-and-mortar) retail channels of a manufacturer. Often, online customers underrate product quality due to a lack of firsthand (touch-and-feel) experience, while retail (offline) customers not only experience the product at the stores but also enjoy retail services. In a dual-channel supply chain, we investigate a new role of free-riding under which online customers improve their perception of product quality and explore its effect on product quality and retail service level decisions. We analytically derive equilibrium product quality, retail service level, and pricing strategies in both the centralized and decentralized supply chains. Free-riding not only improves online customers’ perception of product quality but could also induce the manufacturer to improve product quality in both centralized and decentralized models. Although free-riding can lower the level of retail services in the decentralized model, it can produce higher retail services in the centralized model when the degree of free-riding is higher. We develop an effective contract to coordinate the decentralized supply chain, which allows the manufacturer and retailer to share not only the profits from both channels but also the costs of product quality and retail services. Additionally, we extend the study to incorporate demand disruptions into the model and examine their impact.

Determination of optimal price and quantity in a two-echelon supply chain model with promotional effort and feedback effect in stochastic scenario

The present paper analyzes a dual channel two-echelon supply chain model consisting of one manufacturer and one retailer for a single product. The retailer uses traditional retail channel whereas the manufacturer uses e-tail channel as well as retail channel to boost the sales of the product. Customer feedback is an important factor in present global business environment because from the customer feedback, the manufacturer can reveal the level of satisfaction of the customers and this can help the to improve the product quality. Good feedback from the customers also attracts other new customers to buy the products. A company can never know whether customers are getting value out of their product without customer feedback. The effects of getting customer feedback from the customers and the promotional effort by advertising or by sales team’s initiatives are taken into account in the present model. The model is solved analytically to determine the decision variables which maximize the total profit in case of decentralized as well as centralized systems and the results have been illustrated by numerical examples. The study of this paper reveals that the profit margins of the individual channel members increase considerably if the feedback of the customers on the product is considered.

Product pricing and green decision-making considering consumers' multiple preferences under chain-to-chain competition

PurposeIt is necessary to implement green supply chains. But green development needs to be gradual and coexist with ordinary products in the market. This paper aims to study the green and ordinary product pricing and green decision-making under chain-to-chain competition.Design/methodology/approachThis paper considers consumers' multiple preferences and takes two competitive supply chains with asymmetric channels as the research object. Through the construction of the game models involving different competitive situations, this paper studies the pricing, green decision-making and the supply chains' profits, and discusses the impact of consumer green preference, channel preference, green investment and competition on the decision-making and performance. Finally, this paper further studies the impact of the decision structure on the environmental and economic benefits of supply chains.FindingsThe results show that consumer green preference has an incentive effect on the green supply chain and also provides an opportunity for the regular supply chain to increase revenue. Specifically, consumers' preference for green online channels improves the product greenness, but its impact on the green retailer and regular supply chain depends on the green investment cost. Moreover, competition not only fosters product sustainability, but also improves supply chain performance. This paper also points out that the decentralization of the regular supply chain is conducive to the environmental attributes of the green product, while the environment-friendly structure of the green supply chain is different under different conditions. In addition, the profit of a supply chain under centralized decision is not always higher than that under decentralized decision.Originality/valueThe novelty of this paper is that it investigates the pricing of two heterogeneous alternative products and green decision-making for the green product under the competition between two supply chains with asymmetric channels, in which the green supply chain adopts dual channels and the regular supply chain adopts a single retail channel.

Pricing and manufacturing strategy of dual-channel green supply chain under common product competition

As consumers' green demand continues to rise, the competition between ordinary products and green products is becoming more and more intense. In order to study the impact of product competition and consumer green demand on product price and product greenness, as well as the optimal manufacturing strategy of dual-channel green supply chain, for a manufacturer and a retailer that can produce common products and green products, a set of The dual-channel supply chain composed of traditional retail channels and online direct sales channels, according to the different production modes of manufacturers, established a dual-channel supply chain game model of traditional production mode, green production mode and mixed production mode, and compared the products under the three production modes Price, greenness, and manufacturer's profit are verified with examples. The results show that: based on the consistent pricing strategy, consumer channel preference directly affects product price and greenness; product competition and consumer green demand sensitivity coefficients both promote product prices and product greenness; the manufacturer's optimal manufacturing strategy For the mixed production mode.

Channel selection for retailers in platform economy under cap-and-trade policy considering different power structures

With the outbreak of COVID-19 and some environmental problems in recent years, consumers prefer to shop online and purchase green products. Considering the benefit of the e-commerce platform, offline retailers face the challenge of whether to enter e-commerce platforms. Moreover, different power structures may affect retailer encroachment in the platform economy. Thus, we develop theoretical models considering retailer channel selections, different power structures between a retailer and a manufacturer, and cap-and-trade policy. The main results show that the optimal channel selection of the retailer is affected by the annual service fee, the power structure and the carbon trading price. An interesting result is that the retailer entering the platform has a good chance to reduce the total carbon emissions. In the extensions, we consider online reviews, consumers’ channel preferences, the carbon emission of the logistics, and the shipping cost, and find that the robustness of the main results still holds.

Optimization Design of Short Life Cycle Product Logistics Supply Chain Scheme Based on Support Vector Machine.

In order to better solve the problem of product logistics supply chains with short life cycles, a solution optimization of short life cycle product logistics supply chains based on support vector machines is proposed. This method recommends key technical problems and solutions through information represented by support vector machines and explore the research of short life cycle products to realize logistics supply chains. The research shows that, whether it is a retail channel or a network channel, the RMSE value of the effect index predicted by SVM is smaller than the RMSE value of the improved Bass. It can be seen that the SVM demand forecasting model constructed by considering multiple input factors can obtain a more accurate forecasting effect. The accuracy of the demand forecasting model based on SVM is verified.

Impact of digital resale platforms on brand new or second-hand luxury goods purchase intentions among U.S. Gen Z consumers

ABSTRACT The global sharing economy trend emphasises consumers’ environmentally conscious lifestyle manifested in the contemporary marketplace, such as digital resale platforms. This paper aims to reveal the Gen Z consumers’ purchase intention of brand new or second-hand luxury goods via various retail channels. This study purposively adopted the sample of middle-class Gen Z consumers to forecast the future of the evolving luxury resale industry. We obtained 452 usable responses using an online survey. Second-hand luxury goods owners exhibited greater purchase intention of the luxury goods via digital resale platforms than non-luxury owners and brand-new luxury owners. The findings offer empirical evidence to academia to broaden the perspective on personal luxury goods consumption behaviour. The present study also contributes to the brand-new and second-hand luxury goods industry to better target Gen Z consumers with preferred retail platforms, which also supports the luxury brand managers’ decision-making on retail channel optimisation and brand management strategies.

Operational strategies for IoT-enabled Brick-and-Mortar retailers in a competitive market

Internet of Things (IoT) technology has been widely implemented in the retail industry to achieve sustainable operations; meanwhile, a number of operational concerns such as privacy and security have been exposed in practice. Therefore, more systematic theoretical analysis necessitates being performed in related fields. This paper explores how brick-and-mortar retailers can apply IoT technology to contend with online retailers and attract sustainable development. We first develop the pricing models for the online retailer and the brick-and-mortar retailer, respectively, by considering consumer hassle costs of purchasing in different retail channels and the impact of IoT technology. Further, we examine the benefits of IoT technology to the brick-and-mortar retailer and consumer surplus by comparing different cases. Afterward, to validate the robustness of analytical results from the basic models, we extend them to consider consumer risk aversion toward IoT technology and the price competition. Numerical analyses based on real data are also carried out. This study uncovers surprising findings and derives significant managerial insights. For example, we observe an opportunity that the IoT-enabled brick-and-mortar (IoT-B&M) retailer can regain lost market share from the competitive online retailers. Nevertheless, a higher level of personalized service supported by IoT is not necessarily beneficial to IoT-B&M retailers, which is contrary to our intuitions. Another counter-intuitive is that IoT-B&M retailers are unnecessary to improve service quality in the price competition, and they become challenging to profit when consumers are risk-averse.

The influence of firms’ social relationship with customers on online retail channel

Social media such as Facebook, Twitter, and WeChat have become a distribution channel for market campaigning. Is it a sustainable channel which could provide support for firms' marketing decisions? To boost sales, firms have begun to adopt social media to provide an information service for customers. Considering the impact of the relationships between customers, manufacturers, and retailers, it is still unclear who should offer an information service on how to make optimal marketing decisions. Using the Stackelberg game theoretical model, two scenarios are considered, in which the manufacturer and the retailer solely provide the information service. After comparing the firms’ pricing strategy and the information service provision strategy and profit of the two scenarios, the study finds: first, the better information service the firms offer, the more potential customers will be attracted; second, firms are willing to offer a better information service if the customers have a strong social relationship on social media; third, it is unnecessary for the manufacturer to raise the wholesale price if the retailer provides the information service; fourth, manufacturers or retailers would like to obtain “free riding” – the one who provides the information service will benefit less from it than the one who does not; and finally, the whole online retail channel is better off if the one with stronger social relationship offers the information service.

Information disclosure with endogenous channel structure

AbstractThis article investigates the firms' optimal quality information disclosure strategies in a supply chain, wherein the supplier may encroach into the retail channel to sell products directly to end consumers. We consider two disclosure formats, namely, retailer disclosure (R‐C) and supplier disclosure (S‐C), and examine the optimal disclosure format from each firm's perspective. We show that either firm prefers to delegate the disclosure option to its partner when the supplier cannot encroach. However, the threat of supplier encroachment dramatically alters the firm's preference of disclosure. The supplier may prefer the S‐C format to the R‐C format when the entry cost is low and the disclosure cost is high to achieve a higher quality information transparency. Meanwhile, the retailer may prefer the R‐C format to the S‐C format when the entry cost is intermediate to deter the possible encroachment of the supplier. In this sense, the firms' preferences of disclosure format can be aligned due to the threat of supplier encroachment. The consumer surplus is always higher under the S‐C format while either disclosure format can lead to a higher social welfare. We also consider an alternative scenario under which the supplier encroaches after the product quality information is disclosed. An interesting observation appears that the supplier may encroach when the product quality is low but foregoes encroachment when the product quality gets higher.

Factors Affecting Smallholder Farmers’ Marketing Channel Choice in China with Multivariate Logit Model

Facing the changes in China’s agricultural products marketing channel, smallholder farmers with different characteristics choose various strategies to obtain more benefits. To analyze factors affecting smallholder farmers’ marketing channel choice, we classify four types of channels—Broker Channel, Farmers’ Retailing Channel, Wholesale Market Channel, and Cooperative Channel—and inspect 14 variables based on the survey data of 317 households from four provinces. We use a principal components analysis (PCA) to simplify these 14 variables into seven common factors and a multivariate logit model to study how the factors influence smallholder farmers’ choices. We find that compared with the Broker Channel, the Farmers’ Retailing Channel is mainly affected by the logistics factor, skill factor, risk factor, and size factor; the Wholesale Market Channel is influenced by the logistics factor and age factor; and the Cooperative Channel is mainly influenced by the age factor, logistics factor, and price factor. In conclusion, the logistics factor has a significant positive effect on each channel choice, and the improvement of the market and transportation conditions has a general promoting effect.