Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 294, Issue 3, Pages 936-950Publisher
ELSEVIER
DOI: 10.1016/j.ejor.2020.12.008
Keywords
Retailing; Dual-channel supply chain; Channel move strategy; Operating cost
Funding
- National Natural Science Foundation of China [71572106, 71632008]
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The study suggests that adopting an omnichannel strategy may benefit traditional brick-and-mortar retailers but not necessarily e-tailers, omnichannel retail does not always lead to lower retail prices and enhanced consumer welfare, and manufacturers may be negatively affected by omnichannel retail.
A growing number of retailers are now moving to omnichannel sales and adopting new technologies to integrate the store and the web to offer customers a seamless shopping experience. We develop a stylized model where a manufacturer distributes products through two separate retailers in two market segments, e.g., online vs. offline. The aim of this study is to investigate the impacts of competing retailers' omnichannel moves on supply chain performance. Our model combines pricing interactions and channel move strategies from a supply-side perspective. We obtain three main results. First, though it is suitable for the traditional brick-and-mortar retailer to adopt an omnichannel strategy, it may not be always good for the e-tailer. Second, omnichannel retail does not always lead to lower retail prices and enhanced consumer welfare. It may result in a lower price for the offline segment, but for the online segment, a higher price will be charged. Finally, omnichannel retail may not be good for the manufacturer. An equilibrium { Omnichannel, Digital channel only } strategy outcome of the retailers' channel move game results in a higher demand and more profits for the manufacturer. However, the manufacturer is indeed hurt by the { Omnichannel, Omnichannel} equilibrium. Our study provides useful managerial insights into retailers' omnichannel moves in a supply chain. (c) 2020 Elsevier B.V. All rights reserved.
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