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Dual-channel decision in a shopping complex when considering consumer channel preference

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  • Yugang Yu
  • Libo Sun
  • Xiaolong Guo

Abstract

In practice, dual-channel structures are commonly adopted by manufacturers to reach a wider range of customers. This paper investigates a manufacturer’s dual-channel (“direct” + “indirect”) decision in a shopping complex, considering consumer channel preference between the direct and indirect channels, with the choices for the indirect channel being reselling and agency selling. We develop an analytical framework to study this problem. Our result demonstrates that the dual-channel structures should be adopted when there exists a significant channel preference gap between channels, which in turn could help the manufacturer reduce the substitution effect between channels. Besides, our analysis discloses that consumer channel preference plays a significant role when the manufacturer leverages different indirect selling formats. In the case of reselling, the manufacturer should adopt a dual-channel structure if consumers show a much higher preference for the direct channel. In the case of agency selling, a dual-channel structure should be adopted when consumers significantly prefer either the direct channel or the indirect (agency) platform. Finally, exact conditions are provided in this paper to help manufacturers make optimal dual-channel decisions in shopping complexes.

Suggested Citation

  • Yugang Yu & Libo Sun & Xiaolong Guo, 2020. "Dual-channel decision in a shopping complex when considering consumer channel preference," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(10), pages 1638-1656, October.
    • Handle: RePEc:taf:tjorxx:v:71:y:2020:i:10:p:1638-1656
    DOI: 10.1080/01605682.2019.1621221
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    Citations

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    Cited by:

    1. Guo, Xiaolong & Zhou, Qiang & Bian, Junsong, 2022. "Online retailers’ platform-based Worry-Free-Shopping: Retailing strategy considering consumer valuation bias," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    2. Zhou, Xiaoyang & Liu, He & Li, Jialu & Zhang, Kai & Lev, Benjamin, 2023. "Channel strategies when digital platforms emerge: A systematic literature review," Omega, Elsevier, vol. 120(C).
    3. Sun, Libo & Jiao, Xiaoting & Guo, Xiaolong & Yu, Yugang, 2022. "Pricing policies in dual distribution channels: The reference effect of official prices," European Journal of Operational Research, Elsevier, vol. 296(1), pages 146-157.
    4. Qiaoke Zhang & Hongzhuan Chen & Liangqi Wan, 2022. "Reselling or agency model under markdown pricing policy in the presence of strategic customers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2911-2923, October.
    5. Matsui, Kenji, 2024. "Should competing suppliers with dual-channel supply chains adopt agency selling in an e-commerce platform?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 587-604.
    6. Matsui, Kenji, 2022. "Should a retailer bargain over a wholesale price with a manufacturer using a dual-channel supply chain?," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1050-1066.

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