IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v17y2010i5p430-440.html
   My bibliography  Save this article

Channel integration and profit sharing in the dynamics of multi-channel firms

Author

Listed:
  • Yan, Ruiliang
  • Wang, John
  • Zhou, Bin

Abstract

With the rapid development of e-commerce, many brick and mortar firms are increasingly creating e-commerce channels that operate quite independently from existing physical channels, which lead to intensive channel conflicts. Channel integration with profit sharing can effectively eliminate channel conflicts and improve channel coordination for these multi-channel firms. In this study, we focus on the strategic role played by channel integration with profit sharing in the online-traditional channel competition. We use a game theoretic approach to investigate this issue. We compare non-integrated channel profits with integrated channel profits to show that both the online and traditional channels always benefit from a channel integration strategy by capturing some portion of the incremental profit gains generated by an integrated channel. We utilize a profit bargaining model to implement profit sharing for the online and traditional channels to achieve their channel integration. Based on our results, optimal marketing strategies are derived.

Suggested Citation

  • Yan, Ruiliang & Wang, John & Zhou, Bin, 2010. "Channel integration and profit sharing in the dynamics of multi-channel firms," Journal of Retailing and Consumer Services, Elsevier, vol. 17(5), pages 430-440.
    • Handle: RePEc:eee:joreco:v:17:y:2010:i:5:p:430-440
    DOI: 10.1016/j.jretconser.2010.04.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698910000494
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2010.04.004?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. P D Berger & J Lee & B D Weinberg, 2006. "Optimal cooperative advertising integration strategy for organizations adding a direct online channel," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(8), pages 920-927, August.
    2. Jehoshua Eliashberg, 1986. "Arbitrating a Dispute: A Decision Analytic Approach," Management Science, INFORMS, vol. 32(8), pages 963-974, August.
    3. Kyle Cattani & Wendell Gilland & Hans Sebastian Heese & Jayashankar Swaminathan, 2006. "Boiling Frogs: Pricing Strategies for a Manufacturer Adding a Direct Channel that Competes with the Traditional Channel," Production and Operations Management, Production and Operations Management Society, vol. 15(1), pages 40-56, March.
    4. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    5. Rajiv Lal & Miklos Sarvary, 1999. "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, INFORMS, vol. 18(4), pages 485-503.
    6. 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.
    7. Sunil Gupta & Zvi A. Livne, 1988. "Resolving a Conflict Situation with a Reference Outcome: An Axiomatic Model," Management Science, INFORMS, vol. 34(11), pages 1303-1314, November.
    8. 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.
    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. Yufei Hu & Lianghua Chen & Yingying Chi & Bowen Song, 2022. "Manufacturer encroachment on a closed‐loop supply chain with design for remanufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1941-1959, September.
    2. JoAnne Labrecque & Maurice Doyon & Raymond Dupuis & Genevieve Dufour, 2019. "Compétitivité du secteur agroalimentaire à l’heure du commerce électronique," CIRANO Project Reports 2019rp-16, CIRANO.
    3. Cao, Lanlan & Li, Li, 2015. "The Impact of Cross-Channel Integration on Retailers’ Sales Growth," Journal of Retailing, Elsevier, vol. 91(2), pages 198-216.
    4. He, Peng & He, Yong & Xu, Henry, 2020. "Buy-online-and-deliver-from-store strategy for a dual-channel supply chain considering retailer’s location advantage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    5. Thaichon, Park & Phau, Ian & Weaven, Scott, 2022. "Moving from multi-channel to Omni-channel retailing: Special issue introduction," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    6. Zhao, Yan & Li, Yanhui & Yao, Qi & Guan, Xu, 2023. "Dual-channel retailing strategy vs. omni-channel buy-online-and-pick-up-in-store behaviors with reference freshness effect," International Journal of Production Economics, Elsevier, vol. 263(C).
    7. He, Peng & He, Yong & Tang, Xiaoying & Ma, Shigui & Xu, Henry, 2022. "Channel encroachment and logistics integration strategies in an e-commerce platform service supply chain," International Journal of Production Economics, Elsevier, vol. 244(C).
    8. Radhi, Mohannad & Zhang, Guoqing, 2019. "Optimal cross-channel return policy in dual-channel retailing systems," International Journal of Production Economics, Elsevier, vol. 210(C), pages 184-198.
    9. Huré, Elodie & Picot-Coupey, Karine & Ackermann, Claire-Lise, 2017. "Understanding omni-channel shopping value: A mixed-method study," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 314-330.
    10. Xue, Jiaqi & Qian, Liping & Cai, Jingang & Jiang, Xiuling, 2024. "Seeking stability or change? Retailers’ organizational legitimacy, strategic orientation and cross-channel integration," Journal of Retailing and Consumer Services, Elsevier, vol. 80(C).
    11. Hossain, Tasnim M Taufique & Akter, Shahriar & Kattiyapornpong, Uraiporn & Dwivedi, Yogesh K., 2019. "Multichannel integration quality: A systematic review and agenda for future research," Journal of Retailing and Consumer Services, Elsevier, vol. 49(C), pages 154-163.
    12. van Baal, Sebastian, 2014. "Should retailers harmonize marketing variables across their distribution channels? An investigation of cross-channel effects in multi-channel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 21(6), pages 1038-1046.
    13. Ata Allah Taleizadeh & Mahsa Noori-daryan & Mohammad Reza Soltani & Reza Askari, 2022. "Optimal pricing and ordering digital goods under piracy using game theory," Annals of Operations Research, Springer, vol. 315(2), pages 931-968, August.
    14. Huang, Yeu-Shiang & Lin, Shin-Hua & Fang, Chih-Chiang, 2017. "Pricing and coordination with consideration of piracy for digital goods in supply chains," Journal of Business Research, Elsevier, vol. 77(C), pages 30-40.
    15. Li, Bo & Jiang, Yushan, 2019. "Impacts of returns policy under supplier encroachment with risk-averse retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 104-115.
    16. Huang, Yeu-Shiang & Huang, Wei-Jeh & Fang, Chih-Chiang, 2018. "Coordination for distribution of motion pictures in the context of piracy," Journal of Business Research, Elsevier, vol. 85(C), pages 209-225.
    17. Mirzabeiki, Vahid & Saghiri, Soroosh Sam, 2020. "From ambition to action: How to achieve integration in omni-channel?," Journal of Business Research, Elsevier, vol. 110(C), pages 1-11.

    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. 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.
    2. Wang, Wei & Li, Gang & Cheng, T.C.E., 2016. "Channel selection in a supply chain with a multi-channel retailer: The role of channel operating costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 54-65.
    3. Weon Sang Yoo & Eunkyu Lee, 2011. "Internet Channel Entry: A Strategic Analysis of Mixed Channel Structures," Marketing Science, INFORMS, vol. 30(1), pages 29-41, 01-02.
    4. Xiao, Tiaojun & Choi, Tsan-Ming & Cheng, T.C.E., 2014. "Product variety and channel structure strategy for a retailer-Stackelberg supply chain," European Journal of Operational Research, Elsevier, vol. 233(1), pages 114-124.
    5. Hu, Qiying & Wei, Yihua & Xia, Yusen, 2010. "Revenue management for a supply chain with two streams of customers," European Journal of Operational Research, Elsevier, vol. 200(2), pages 582-598, January.
    6. Matsui, Kenji, 2016. "Asymmetric product distribution between symmetric manufacturers using dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 248(2), pages 646-657.
    7. Li, Yongjian & Lin, Zhangxi & Xu, Lei & Swain, Ajaya, 2015. "“Do the electronic books reinforce the dynamics of book supply chain market?”–A theoretical analysis," European Journal of Operational Research, Elsevier, vol. 245(2), pages 591-601.
    8. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    9. Subrata Saha, 2016. "Channel characteristics and coordination in three-echelon dual-channel supply chain," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(3), pages 740-754, February.
    10. Niu, Baozhuang & Ruan, Yiyuan & Xu, Haotao, 2024. "Less is more? Channel separation to mitigate triple competition and combat copycats in agency e-commerce," European Journal of Operational Research, Elsevier, vol. 315(1), pages 242-270.
    11. 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.
    12. He, Bo & Gan, Xianghua & Yuan, Kaifu, 2019. "Entry of online presale of fresh produce: A competitive analysis," European Journal of Operational Research, Elsevier, vol. 272(1), pages 339-351.
    13. Yang Liu & Yang Zhang, 2018. "Closed Loop Supply Chain under Power Configurations and Dual Competitions," Sustainability, MDPI, vol. 10(5), pages 1-23, May.
    14. Qing, Qiankai & Deng, Tianhu & Wang, Hongwei, 2017. "Capacity allocation under downstream competition and bargaining," European Journal of Operational Research, Elsevier, vol. 261(1), pages 97-107.
    15. Huang, Wei & Swaminathan, Jayashankar M., 2009. "Introduction of a second channel: Implications for pricing and profits," European Journal of Operational Research, Elsevier, vol. 194(1), pages 258-279, April.
    16. Eunkyu Lee & Richard Staelin & Weon Sang Yoo & Rex Du, 2013. "A “Meta-Analysis” of Multibrand, Multioutlet Channel Systems," Management Science, INFORMS, vol. 59(9), pages 1950-1969, September.
    17. Li, Guo & Li, Lin & Sun, Jiasen, 2019. "Pricing and service effort strategy in a dual-channel supply chain with showrooming effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 32-48.
    18. Xu, Guangye & Dan, Bin & Zhang, Xumei & Liu, Can, 2014. "Coordinating a dual-channel supply chain with risk-averse under a two-way revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 171-179.
    19. Bian, Junsong & Guo, Xiaolei & Li, Kevin W., 2018. "Decentralization or integration: Distribution channel selection under environmental taxation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 113(C), pages 170-193.
    20. Cai, Gangshu (George) & Zhang, Zhe George & Zhang, Michael, 2009. "Game theoretical perspectives on dual-channel supply chain competition with price discounts and pricing schemes," International Journal of Production Economics, Elsevier, vol. 117(1), pages 80-96, January.

    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:joreco:v:17:y:2010:i:5:p:430-440. 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-and-consumer-services .

    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.