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Retail service for mixed retail and E-tail channels

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  • Wei Hu
  • Yongjian Li

Abstract

Together with regular retail channel, a firm can distribute products directly through Internet (referred to as an “e-tail” distribution channel). The competitive edge of the retail channel lies in more value-added services, some of which are unavailable through the e-tail channel. We consider a model mixed with retailing and e-tailing distribution channels where the service level and price decision are made, respectively, ex ante and ex post demand realizations. From the firm’s perspective of managing the two channels, we acquire the optimal decisions and characterize the effects of the demand uncertainty on the firm’s optimal retail service and expected profit. Applying stochastic comparison method, we show the firm’s retail service and profit both increase in the demand mean, and the firm profits from the increase of the convex order of the demand by decreasing his service level. Further, if the coefficient of the demand increases, we characterize that the firm benefits from it. Finally, several numerical studies are presented to gain insights. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Wei Hu & Yongjian Li, 2012. "Retail service for mixed retail and E-tail channels," Annals of Operations Research, Springer, vol. 192(1), pages 151-171, January.
    • Handle: RePEc:spr:annopr:v:192:y:2012:i:1:p:151-171:10.1007/s10479-010-0818-7
    DOI: 10.1007/s10479-010-0818-7
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    2. Perlman, Yael, 2022. "Pricing decisions of online and offline retailers, each offering a competing benefit," Operations Research Perspectives, Elsevier, vol. 9(C).
    3. Yucai Wu & Jiguang Wang & Changhong Li, 2019. "Decisions of Supply Chain Considering Chain-to-Chain Competition and Service Negative Spillover Effect," Sustainability, MDPI, vol. 11(6), pages 1-19, March.
    4. Chengli Liu & C. K. M. Lee & K. H. Leung, 2019. "Pricing Strategy in Dual-Channel Supply Chains with Loss-Averse Consumers," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(05), pages 1-22, October.
    5. Jie Wei & Jing Zhao, 2016. "Pricing decisions for substitutable products with horizontal and vertical competition in fuzzy environments," Annals of Operations Research, Springer, vol. 242(2), pages 505-528, July.
    6. Shuihua Han & Yufang Fu & Bin Cao & Zongwei Luo, 2018. "Pricing and bargaining strategy of e-retail under hybrid operational patterns," Annals of Operations Research, Springer, vol. 270(1), pages 179-200, November.
    7. Feng Fu & Shuangying Chen & Wei Yan, 2023. "Implications of e-tailers’ transition from reselling to the combined reselling and agency selling," Electronic Commerce Research, Springer, vol. 23(3), pages 1885-1920, September.
    8. Shen, Bin & Qian, Rongrong & Choi, Tsan-Ming, 2017. "Selling luxury fashion online with social influences considerations: Demand changes and supply chain coordination," International Journal of Production Economics, Elsevier, vol. 185(C), pages 89-99.
    9. Matsui, Kenji, 2017. "When should a manufacturer set its direct price and wholesale price in dual-channel supply chains?," European Journal of Operational Research, Elsevier, vol. 258(2), pages 501-511.
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