Search Results (5)

In a duopoly market comprising an e-tailer and a physical retailer, we develop analytical models to explore the e-tailer’s strategy of introducing a virtual showroom to alleviate consumers’ fit uncertainty. While a virtual showroom can increase online consumer traffic, consumers may instead purchase from physical stores (i.e., webrooming) or reduce offline browsing before buying online (i.e., showrooming). Our findings indicate that consumers with a moderate online hassle cost tend to showroom when offline travel cost is not high, whereas those with a high online hassle cost rely on the virtual showroom for webrooming. Therefore, we identify the conditions under which a virtual showroom should be introduced. Specifically, when the cost of travel to the store is relatively high, the e-tailer can profit from introducing a virtual showroom if its return-handling cost is not too low. Under moderate travel cost, the e-tailer can leverage a virtual showroom to weaken competition if the return-handling cost is not too high, enabling both retailers to benefit. Notably, the impact of product fit probability on virtual showroom strategy decisions reverses between high and moderate travel costs. Under specific conditions, the virtual showroom can achieve a “win-win-win” situation for the e-tailer, the physical retailer, and consumers. Full article

In the context of new retail, the development of omni-channels is flourishing. The entry threshold for the clothing industry is low, and the popularity of online shopping has, to some extent, reduced consumers’ perception of the authenticity of clothing. As a result, returns are a serious issue in the clothing industry. This article focuses on a clothing retailer while addressing retail and return issues in the clothing industry. It develops and analyzes models for an online single-channel strategy and two omni-channel showroom strategies: “Experience in Store and Buy Online (ESBO)” with an experience store and “Buy Online and Return in Store (BORS)” with a physical store. These models are used to examine the pricing and return decisions of the retailer in the three strategic scenarios. Additionally, this study considers the impact of fashion trends on demand. It explores pricing and return strategies in two showroom models under the influence of the fashion trend decay factor. Moreover, sensitivity analyses and numerical analyses of the important parameters are performed. This research demonstrates the following: (1) In the case of high return transportation costs and online return hassle costs, clothing retailers can attract consumers to increase profits through establishing offline channels; (2) extending the sales time of fashionable clothing has a positive effect on profits, but blindly prolonging the continuation of the sales time will lead to a decrease in profits; (3) the larger the initial fashion level or the smaller the fashion level decay factor, the greater the optimal retailer profits. The impacts of the initial fashion level and fashion level decay factor on profits are more significant in omni-channel operations. This article aims to identify optimal strategies for retailers utilizing omni-channel operations and offer managerial insights for the sale of fashionable apparel. Full article

Advertising and service investment can enhance brand goodwill to increase the sales of branded goods. However, the impact of advertising and services on brand goodwill is not immediate but delayed. At the same time, due to the different service characteristics provided by various channels, the phenomenon of bidirectional free-riding occurs. Therefore, this paper studies the dynamic cooperation between service and advertising in the O2O (online to offline) supply chain dominated by brand owners and explores the impacts of advertising, service delay and service free-riding among channels on the dynamic cooperation decisions of the O2O supply chain. A differential game model between brands and retailers is constructed by incorporating the delay effect and the bidirectional free-riding phenomenon. The optimal advertising and service strategies and performance problems of O2O supply chain enterprises under a centralized decision, brand cost-sharing decision and bilateral cost-sharing decision are compared and analyzed. The influence of delay time, showrooming and webrooming effects on the profit of each firm is investigated by example. The results show that the service strategy, advertising strategy and brand goodwill of the O2O supply chain members are optimal under a centralized decision. Still, the supply chain profit is not necessarily optimal under the delay time, showrooming and webrooming effect coefficients. Bilateral cost-sharing contracts can achieve Pareto improvement of supply chain performance. Appropriate setting of a bilateral cost-sharing ratio can adjust the adverse effects of delay and bidirectional free-riding. The long-term strategies to deal with the delay and bidirectional free-riding phenomena are as follows: the bilateral cost-sharing contract can improve corporate profits. Setting the wholesale price, online direct-selling price and service-sharing ratio by brand owners can effectively promote retailers’ investment in service, achieving a win-win situation. Retailers maintain high pricing and service levels to enhance the brand premium ability of physical stores and achieve long-term development. Full article

It is becoming increasingly difficult to ignore circular and sustainable economies. A traditional chain transits to a dual-channel supply chain, extending its online channel for more customers, and keeping its offline channel so as to reduce resource utilization for sustainable business. However, there exists some conflict between offline and online channels, such as the showrooming effect (i.e., customers visit an offline store to experience products but then buy them online with a lower price). This work studies a three-echelon book dual-channel supply chain involving an author, an online publisher and an offline retailer. Based on Stackelberg game theory, it investigates the optimal pricing solutions and the optimal retailer’s service effort level with two copyright models and considers the showrooming effect based on either decentralized or centralized decision-making. Afterwards, it develops a cost-sharing contract to make them achieve Pareto optimality. Furthermore, this research studies the influence of the showrooming effect on the optimal decisions and the profits of each member through theoretical and numerical analyses. The findings show that a well-designed contract can lead dual-channel members to cut down the negative impact of the showrooming effect and realize the win–win situation. Finally, it proposes some managerial insights and possible directions for the future. Full article

Recently, the showroom model has developed fast for allowing consumers to evaluate a product offline and then buy it online. This paper aims at exploring the optimal information acquisition strategy and its incentive contracts in an e-commerce supply chain with two competing e-tailers and an offline showroom. Based on signaling game theory, we build a mathematical model by considering the impact of experience service and competition intensity on consumers’ demand. We find that, on the one hand, information acquisition promotes supply chain members to obtain demand information directly or indirectly, which leads to forecast revenue. On the other hand, information acquisition promotes supply chain members to distort optimal decisions, which results in signal cost. The optimal information acquisition strategy depends on the joint impact of forecast revenue, signal cost and demand forecast cost. Notably, in some conditions, the offline showroom will not acquire demand information even when its cost is equal to zero. We also design two different information acquisition incentive contracts to obtain Pareto improvement for all supply chain members. Full article