IDEAS home Printed from https://ideas.repec.org/a/eee/jouret/v86y2010i4p401-413.html
   My bibliography  Save this article

A Decision Model for E-commerce-enabled Partial Market Exit

Author

Listed:
  • Syam, Siddhartha
  • Bhatnagar, Amit

Abstract

Struggling retail chains often try to recover profitability by closing some of their stores. The challenge in this strategy lies in determining how many stores to close, as store exit has implications for both the customers and the supply chain. After a store closes, its customers are lost forever to the competition, unless there is a surviving open store nearby or an electronic alternative such as an e-store. From the supply chain perspective, after a store closes, its supporting regional distribution center is left with less business, and thus reduced viability. This paper develops a decision support model to study the profitability of alternative retail network structures by varying the proportion of stores that are closed, the average price sensitivity of demand, the price difference between the online store and the traditional retailers, and customer retention rates.

Suggested Citation

  • Syam, Siddhartha & Bhatnagar, Amit, 2010. "A Decision Model for E-commerce-enabled Partial Market Exit," Journal of Retailing, Elsevier, vol. 86(4), pages 401-413.
  • Handle: RePEc:eee:jouret:v:86:y:2010:i:4:p:401-413
    DOI: 10.1016/j.jretai.2010.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022435910000321
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jretai.2010.05.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    2. Charles F. Phillips, 1934. "Chain-Store Mortality," The Journal of Business, University of Chicago Press, vol. 7, pages 318-318.
    3. Aksen, Deniz & Altinkemer, Kemal, 2008. "A location-routing problem for the conversion to the "click-and-mortar" retailing: The static case," European Journal of Operational Research, Elsevier, vol. 186(2), pages 554-575, April.
    4. Pentina, Iryna & Pelton, Lou E. & Hasty, Ronald W., 2009. "Performance Implications of Online Entry Timing by Store-Based Retailers: A Longitudinal Investigation," Journal of Retailing, Elsevier, vol. 85(2), pages 177-193.
    5. Kwon, Wi-Suk & Lennon, Sharron J., 2009. "Reciprocal Effects Between Multichannel Retailers’ Offline and Online Brand Images," Journal of Retailing, Elsevier, vol. 85(3), pages 376-390.
    6. Konuş, Umut & Verhoef, Peter C. & Neslin, Scott A., 2008. "Multichannel Shopper Segments and Their Covariates," Journal of Retailing, Elsevier, vol. 84(4), pages 398-413.
    7. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    8. Pauli Murto, 2004. "Exit in Duopoly Under Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 111-127, Spring.
    9. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
    10. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    11. Howard C. Greer, 1936. "Business Mortality Among Retail Meat Stores in Chicago Between 1920 and 1933," The Journal of Business, University of Chicago Press, vol. 9, pages 189-189.
    12. Grewal, Dhruv & Levy, Michael, 2009. "Emerging Issues in Retailing Research," Journal of Retailing, Elsevier, vol. 85(4), pages 522-526.
    13. Ganesan, Shankar & George, Morris & Jap, Sandy & Palmatier, Robert W. & Weitz, Barton, 2009. "Supply Chain Management and Retailer Performance: Emerging Trends, Issues, and Implications for Research and Practice," Journal of Retailing, Elsevier, vol. 85(1), pages 84-94.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fen Wang & Manuel Mora & Mahesh S. Raisinghani, 2015. "Web-Based Decision Support for E-Business Strategies: A Balanced Scorecard Approach," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 14(03), pages 455-479.
    2. Suryandari, Retno Tanding & Paswan, Audhesh K., 2014. "Online customer service and retail type-product congruence," Journal of Retailing and Consumer Services, Elsevier, vol. 21(1), pages 69-76.
    3. Feng, Cong & Fay, Scott, 2020. "Store Closings and Retailer Profitability: A Contingency Perspective," Journal of Retailing, Elsevier, vol. 96(3), pages 411-433.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vaishnav, Bharat & Ray, Sourav, 2023. "A thematic exploration of the evolution of research in multichannel marketing," Journal of Business Research, Elsevier, vol. 157(C).
    2. Yan, Ruiliang & Ghose, Sanjoy, 2010. "Forecast information and traditional retailer performance in a dual-channel competitive market," Journal of Business Research, Elsevier, vol. 63(1), pages 77-83, January.
    3. Xubing Zhang, 2009. "Retailers' Multichannel and Price Advertising Strategies," Marketing Science, INFORMS, vol. 28(6), pages 1080-1094, 11-12.
    4. Elie Ofek & Zsolt Katona & Miklos Sarvary, 2011. ""Bricks and Clicks": The Impact of Product Returns on the Strategies of Multichannel Retailers," Marketing Science, INFORMS, vol. 30(1), pages 42-60, 01-02.
    5. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    6. Jeffrey D. Shulman, 2014. "Product Diversion to a Direct Competitor," Marketing Science, INFORMS, vol. 33(3), pages 422-436, May.
    7. Tuo Wang & Esther Gal-Or & Rabikar Chatterjee, 2009. "The Name-Your-Own-Price Channel in the Travel Industry: An Analytical Exploration," Management Science, INFORMS, vol. 55(6), pages 968-979, June.
    8. Brown, James R. & Dant, Rajiv P., 2009. "The Theoretical Domains of Retailing Research: A Retrospective," Journal of Retailing, Elsevier, vol. 85(2), pages 113-128.
    9. Bing Jing, 2018. "Showrooming and Webrooming: Information Externalities Between Online and Offline Sellers," Marketing Science, INFORMS, vol. 37(3), pages 469-483, May.
    10. Joo, Mingyu & Mazumdar, Tridib & Raj, S.P., 2012. "Bidding Strategies and Consumer Savings in NYOP Auctions," Journal of Retailing, Elsevier, vol. 88(1), pages 180-188.
    11. Siva Viswanathan, 2005. "Competing Across Technology-Differentiated Channels: The Impact of Network Externalities and Switching Costs," Management Science, INFORMS, vol. 51(3), pages 483-496, March.
    12. Mazón, Cristina & Pereira, Pedro, 2001. "Electronic commerce, consumer search and retailing cost reduction," UC3M Working papers. Economics we016722, Universidad Carlos III de Madrid. Departamento de Economía.
    13. Anindya Ghose & Avi Goldfarb & Sang Pil Han, 2013. "How Is the Mobile Internet Different? Search Costs and Local Activities," Information Systems Research, INFORMS, vol. 24(3), pages 613-631, September.
    14. Jeonghye Choi & David R. Bell & Leonard M. Lodish, 2012. "Traditional and IS-Enabled Customer Acquisition on the Internet," Management Science, INFORMS, vol. 58(4), pages 754-769, April.
    15. Fei Gao & Vishal V. Agrawal & Shiliang Cui, 2022. "The Effect of Multichannel and Omnichannel Retailing on Physical Stores," Management Science, INFORMS, vol. 68(2), pages 809-826, February.
    16. Erik Brynjolfsson & Yu (Jeffrey) Hu & Mohammad S. Rahman, 2009. "Battle of the Retail Channels: How Product Selection and Geography Drive Cross-Channel Competition," Management Science, INFORMS, vol. 55(11), pages 1755-1765, November.
    17. Bernstein, Fernando & Song, Jing-Sheng & Zheng, Xiaona, 2008. ""Bricks-and-mortar" vs. "clicks-and-mortar": An equilibrium analysis," European Journal of Operational Research, Elsevier, vol. 187(3), pages 671-690, June.
    18. Yuanzhu Lu & Xiaolin Xing & Fang-Fang Tang, 2008. "Retailers' Incentive to Sell through a New Selling Channel and Pricing Behavior in a Multi-channel Environment," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 315-343, November.
    19. Chun, Hyunbae & Joo, Hailey Hayeon & Kang, Jisoo & Lee, Yoonsoo, 2020. "Diffusion of E-Commerce and Retail Job Apocalypse: Evidence from Credit Card Data on Online Spending," CEI Working Paper Series 2020-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    20. Dazhong Wu & Gautam Ray & Xianjun Geng & Andrew Whinston, 2004. "Implications of Reduced Search Cost and Free Riding in E-Commerce," Marketing Science, INFORMS, vol. 23(2), pages 255-262, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jouret:v:86:y:2010:i:4:p:401-413. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.