Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures

In recent years, omnichannel retailing and remanufacturing issues have rapidly emerged in the closed-loop supply chain (CLSC). The omnichannel is a combination of online and in-store retailing, and it affects supply chain relationships and channel power structures by changing value creation processes. It allows consumers a hybrid shopping experience where they can order products online and pick them up in the store or test in-store and buy online (TSBO). Despite this practice, no studies exist on CLSC considering omnichannel retailing under different channel power structures. We investigate the TSBO retailing strategy and its impact on CLSC profit considering price competition between manufacturer and remanufacturer under Manufacturer Stackelberg (MS), Retailer Stackelberg (RS), Vertical Nash (VN), and cooperation (CO) models game settings. In this paper, mathematical models are developed to drive the optimal solution. A two-part tariff coordination mechanism (i.e., IS model) is also used to integrate all supply chain members. The proposed models examine the environmental and social welfare benefits of adopting green innovation products and remanufacturing processes in omnichannel retailing. A numerical study is carried out to illustrate the proposed models' application. The results show that the IS model can synchronize the economic, environmental, and social aspects leading to significant increases in performance. Total supply chain profit under the CO model is the highest. The manufacturer and remanufacturer generate higher profits in the MS model, whereas the retailer makes higher profits in the RS and VN models. When a manufacturer only wants to increase profit with green processes and is not concerned about omnichannel processes, more resources must be allocated for green innovation.     

基于需求与储量相关条件下的供应链协调研究

供应链模型由一个制造商和零售商组成,其中制造商向零售商供应商品,零售商面临客户的商品需求与储量相关。在该模型中,制造商欲通过批发价和储量成本补偿方式来协调分散式供应链并赢利,使供应链分散式时的系统总储量等于集中控制时的储量水平。假定商品需求是依赖储量的函数和一个储量成本补偿。在单个零售商情形下,制造商需要增大批发价及支付给零售商的储量成本补贴来协调整个渠道并盈利。当两个及多个零售商竞争时,假定市场需求依赖于总储量水平,零售商按照储量比例分割市场。     

The impact of information sharing and bullwhip effects on improving consumer services in dual-channel retailing

Data sharing among the supply chain players can be an exceptionally significant factor for the retailing industry. In this consideration, an improved retailing methodology for a dual-channel supply chain with a single retailer and manufacturer is built under the bullwhip effect and asymmetric data sharing. Retailer provides asymmetric information to the manufacturer regarding demand to increase their profit. In this scenario, measuring the bullwhip effect is essential in retailing strategy. By adopting an online-to-offline retailing strategy, industries can earn more profit and increase the satisfaction level of customers. The present study focuses on dual-channel retailing, where the demand for the product in both channels varies with the selling price. Keeping in mind the goal of sustainable development, an advanced transportation strategy is utilized in this study, along with some carbon emission costs. Autonomated inspection is utilized to identify defective products. Finally, centralized and decentralized profit functions are formulated for this study. Several cases and numerical examples are provided to validate this study. It is clear from the numerical findings that information sharing within the players provides 1.26% more profit compared to a decentralized case. Due to asymmetric information, which leads to the bullwhip effect, the retailing system faces loss. Thus, information sharing is 0.19% beneficial for dual-channel retailing. Sensitivity analysis for key parameters ensures the findings' applicability in the real world.     

How a novel option contract helps a green product to enter a traditional product's retailing channel: A mathematical modeling approach

Multi-sourcing is a practical strategy in retail channels that allows retailers facing uncertainties to respond more effectively to consumers' needs by distributing market demand across multiple supply sources. In this respect, this research investigates a price-setting retailing channel, including two manufacturers (a traditional manufacturer and a green manufacturer) and one retailer where end-of-life products can be collected. The retailer faces an uncertain price-dependent demand and sets orders from both supply directions based on a low-cost ordering approach. The primary purpose of this study is to develop an optimal solution to allow the green product to enter the retailing channel of the non-green product. Accordingly, this research develops and compares two different contractual mechanisms from the standpoint of the green manufacturer/retailer and the supply chain (SC): (1) a penalty-based contract and (2) a modified call option contract mixed with a cost-sharing mechanism. The main contribution of the current paper is to investigate an option contract for the effective management of a closed-loop supply chain and combine it with a cost-sharing contract as a new approach. Another contribution is that the developed model considers two practical channels for collecting and returning obsolete products to the green manufacturer: (1) the retailer is responsible for collecting and returning obsolete products, and (2) collecting and returning obsolete products is outsourced to a third-party logistics provider (3PL). Eventually, the models' efficiency is verified by investigating different numerical experiments, discovering that the proposed reservation-based contract outperforms the penalty-based contract for both parties' profitability and retailing channel's improvement. Besides, the present study finds that hiring 3PL significantly increases the green manufacturer's profit compared to other scenarios.     

品牌权益影响下的双渠道供应链定价决策及协调研究

针对一个制造商开通直销渠道销售产品与零售商的价格竞争问题,文章基于制造商与零售商共享品牌权益的视角,研究在制造商双渠道供应链结构中,价格和品牌权益同时作用下的双渠道供应链定价决策,分别分析在集中决策下和分散决策下,品牌权益对两种渠道价格和利润的影响。研究发现：在集中决策下,两种渠道的价格、利润与品牌权益成正相关;在分散决策下,当品牌权益超过一定临界值时,其对制造商直销渠道的价格和制造商总利润的影响大于零售商。鉴于品牌权益对供应链定价决策的重要影响,文章建立制造商和零售商之间的品牌权益成本共担机制,并通过数值仿真分析发现,当实施品牌权益成本共担机制时,制造商和零售商的销售价格和利润均是最优的。因此,零售商应加强与制造商的互动,共同创造高品牌权益的同时,也应共同分享高品牌权益。     

Do channel members value the multiple-cooperation strategy?

When the manufacturer distributes his products through online and traditional channels, what type of innovative marketing strategy can be utilized to solve the channel conflict and improve the performances of all channel members? Our research addresses this important question by initiating a triple cooperative strategy for channel members to employ in a manufacturer – retailer dual-channel supply chain. Our results show that when the product is less compatible with online channel than with traditional channel, channel members can utilize a triple cooperative strategy to improve channel coordination and their individual performances effectively and efficiently. First, the manufacturer can utilize supportive retail sales effort as a valuable coordination mechanism to improve the performances of all channel members in the dual-channel distribution. Second, a channel coordinative price strategy can be utilized to further improve the performance of whole channel. Finally, a profit sharing mechanism is needed to create a Pareto result for both the manufacturer and the retailer. Furthermore, we extend our model to study the value of triple cooperative strategy in a manufacturer – two competitive retailers supply chain and derive the optimum marketing strategy.     

Optimal generic and brand advertising efforts in a decentralized supply chain considering customer surplus

While the previous researches of advertising efforts decisions focus on only the firms' profit target, no literature introduces corporation social responsibility target into advertising efforts decisions of a supply chain (SC). To fill this gap, we consider a two-stage SC with a manufacturer and a retailer where the SC members consider the customer surplus. Both the retailer and the manufacturer can invest in generic advertising efforts to influence and increase the products' sales volumes. This paper investigates the following four scenarios: (1) The retailer cares the customer surplus (Model I); (2) The manufacturer cares the customer surplus (Model II); (3) Both the retailer and the manufacturer care the customer surplus (Model III); (4) We then extend the model III to the case that the manufacturer invests in both the generic and brand advertising efforts (Model IV). The objective of this paper is to determine the optimal retail price, the optimal advertising efforts, and the optimal profits of SC members, and find the influence of customer concern level on the SC performance. Finally, numerical examples are conducted to investigate the influence of the customer concern levels of the retailer or the manufacturer on the profits of the SC members and the entire SC. We also study the joint impacts of the customer concern levels of the retailer and the manufacturer on the SC performance. We find that the SC obtains the highest profits when the retailer's customer concern level and the manufacturer's customer concern level are relatively high, and the best cooperative strategy for the retailer and the manufacturer is that they improve customer concern level simultaneously.     

Equilibrium in supply chain network with competition and service level between channels considering consumers' channel preferences

This paper considers a dual-channel supply chain network consisting of multiple competing manufacturers, multiple competing retailers and multiple demand markets. Each manufacturer produces and distributes his products via direct e-commerce channel along with traditional physical channel. The manufacturers also provide services for the consumers in both channels, while the retailers only offer offline services to the consumers. On this basis, a dual-channel supply chain network equilibrium model with pricing and service decisions are established based on variational inequality theory. Nash equilibrium solutions are obtained by modified projection and contraction method. Combined with numerical examples, we analyze the impact of three critical factors on the equilibrium states and profits. Some interesting managerial insights are derived. We find that the profits of the manufacturers decrease (increase) in the raw material conversion ratio under single channel case (dual-channel case), while the increase of the raw material conversion ratio always benefits the retailers and the whole dual-channel supply chain network; the service level in each channel is positively correlated with its transaction volume. There are significant inconsistencies among the best combinations of cross-channel price coefficients between two channels for the manufacturers, the retailers and the whole dual-channel supply chain network. The same equilibrium decision (service level, price) or profit may exhibit the opposite changing trend with respect to cross-channel price coefficients under two cases of active e-commerce transaction and inactive e-commerce transaction. When the introduction of e-commerce channel can bring more profits for the whole dual-channel supply chain network, the manufacturers should provide reasonable allocation schemes of profit increment for the retailers to satisfy their participation constraints.     

Evolution of retail formats: Past,present, and future

In this paper, the authors review current literature on retail formats and propose a new customer-centric framework for retailers to focus on as they continue to innovate and evolve. Specifically, they review the literature on how formats compare in their attributes and compete with each other; the role of customer behavior in format choice; and developments in multichannel and omnichannel retailing. They propose a framework for retail formats suggesting two paths – either reduce friction in the customer journey or enhance customer experience. They discuss the challenges faced by offline (physical store-first) and online (digital-first) retailers and elaborate on strategies each type of retailer is pursuing to address these challenges. Finally, they offer directions for future research in this domain. They conclude by calling for newer digital-first and physical-first players to continue coming up with different customer-centric formats, which they predict will slowly morph into integrated retailers, leaving space for newer players to enter the market and hence keep the wheel of retailing spinning.     

考虑存在平行进口的跨国供应链价格竞争研究

跨境电商以及配套物流网络的快速发展致使平行进口对部分行业产生了巨大影响。通过建立三种市场权力模式下跨国制造商与本地制造商的博弈模型,本文对比分析有无灰色市场的不同模式供应链参与者的定价及利润,探析平行进口对低支付意愿市场的跨国制造商与本地制造商之间寡头竞争的影响。研究发现:市场支付意愿比值低于某一阈值时不会出现平行进口,市场权力模式和灰色市场的存在能影响跨国供应链参与者的收益多寡及定价策略;灰色市场有益于本地制造商和平行进口商,市场处于单一制造商主导模式有助于减少跨国制造商损失、增加本地制造商收益及缩减平行进口商的利润,在制造商共同主导模式下存在一个市场支付意愿比值区间,致使跨国制造商收益增加;平行进口促进还是抑制寡头供应链的价格竞争,取决于市场权力的结构形式。     

Marketplace,reseller, or web-store channel: The impact of return policy and cross-channel spillover from marketplace to web-store

With the advent of e-commerce, new platform sales have been created in the online retailing industry, and choosing the best platform has become a challenge for manufacturers. For instance, marketplace and web-store are two e-channels for selling goods directly to end customers. In the marketplace, manufacturers sell their products directly to online customers through e-tailers' platforms and share revenue with e-tailers. In the web-store channel, manufacturers sell their products directly to end customers through their platforms and do not need to e-tailers' platforms. However, some manufacturers and e-tailers continue with reseller channel yet. Reseller channel is another conventional channel in which manufacturers distribute their products to e-tailers, then e-tailers choose retail prices and sell them to consumers. Therefore, with these three different channels, the key question is when and under what conditions manufacturers can choose marketplace or reseller channel in addition to their web-store channels to grow their market share. In this paper, we analyze these three different e-channels and the conditions that manufacturers adopt the marketplace or reseller channel. For this purpose, we consider a model with two manufacturers and one e-tailer in which the manufacturers have their web-store channels, and they are willing to adopt another channelـ reseller or marketplace. The manufacturers offer a return policy in their web-store channels as a competitive strategy for attracting more customers. We find that offering return policy in web-store channels has no effect on the choice between the marketplace and reseller channel, but it has an impact on the amount of manufacturers' profits in each channel. Also, we demonstrate that regardless of offering return policy, as the coefficient of cross-channel effect increases, the manufacturers' profits, whether they choose reseller channel or marketplace channel, increase. But, as the coefficient of cross-channel effect increases, the e-tailer's profit increases when both manufacturers choose reseller channel, otherwise decreases. If manufacturers offer a return policy, the e-tailer's profit is highest when both manufacturers choose reseller channel, and if they do not offer a return policy, the e-tailer's profit is highest when both manufacturers choose marketplace channel.     

信息共享下双渠道制造商与零售商协调研究

随着internet的应用越来越广泛,许多制造商不仅使用传统的销售商渠道销售产品,而且通过网上直销的方式进行产品销售,双渠道增加了渠道之间的竞争。零售商为了在渠道竞争中获得优势,可以通过花费一定的成本增加零售产品价值。通过建立博弈模型分析强势制造商在对零售商信息完全、信息不完全情况下的定价策略,分析得出制造商获得零售商信息的价值,以及零售商愿意向制造商分享成本信息时的临界收益,旨在提出参考建议。     

An evolutionary game theoretic model for analyzing retailers’ behavior when introducing economy and premium private labels

The significant growth of Private Labels (PLs) has led to a growing competition between National Brand (NB) manufacturers, on the one hand, and retailers, on the other; while manufacturers strive to achieve enhanced customer loyalty through such measures as innovation and advertising, retailers focus their efforts on offering high-quality products. This paper considers for the first time a supply chain consisting of one NB manufacturer and a population of retailers under two scenarios. In the first, each retailer sells NB and chooses either to introduce an Economy Private Label (EPL) or not. In the second scenario, each retailer chooses either to introduce a Premium Private Label (PPL) or not. To solve the problem, an evolutionary game is introduced and the retailers’ behavior is analyzed. Using two numerical examples, parametric analysis and managerial insights are also provided. It is found that the entire population chooses the strategy of introducing a private label (EPL or PPL) and that this strategy yields greater profits for both the manufacturer and the retailers than other strategy profiles might do. In addition, it is shown that both the retailers and the manufacturer gain more profits by introducing a PPL rather than an EPL.     

Managing advertising investments in marketing channels

This paper investigates how should manufacturers optimally allocate resources to retailer-initiated (retailer) advertising through cooperative advertising programs and own (manufacturer) advertising in a bilateral monopoly. Retailer advertising stimulates immediate sales but may also harm long-term (post-advertising) demand, whereas manufacturer advertising aims at building brand equity and stimulates both immediate and long-term sales. A game-theoretic model in which a manufacturer and a retailer set pricing and advertising decisions over a two-period planning horizon is developed to account for the differences between manufacturer and retailer advertising. We characterize equilibrium solutions for four advertising scenarios for the manufacturer, ranging from no investment in any advertising activity to undertaking own advertising and supporting retailer advertising simultaneously. Comparing the two players’ equilibrium strategies and profits across these scenarios, we find that manufacturers should avoid offering exclusively cooperative advertising programs to retailers. When retailer advertising positively influences long-term sales, manufacturers should offer cooperative advertising supports to retailers in addition to undertaking their own advertising. When retailer advertising negatively affects long-term sales, manufacturers can still undertake own advertising and offer cooperative advertising under certain conditions. However, if these conditions are not met, focusing exclusively on own advertising is their best advertising strategy. Retailers also prefer scenarios in which manufacturers advertise, but may choose not to participate in manufacturers’ cooperative advertising programs. This leads to suboptimal outcomes if cooperative advertising programs are not enhanced by additional incentives (e.g., side payments or other services).     

Second-Hand Markets and Intrasupply Chain Competition

We consider a monopolistic supply chain consisting of a manufacturer and a retailer (service provider) who in addition to selling new durables, buy and resell used ones. The supply chain provides services for both new and used goods. Accordingly, consumers incur service charges for all types of goods. This study is motivated by the modern trend in cell phone businesses where retailers commence buying used phones from customers willing to upgrade their phones. The used phones are then refurbished and resold along with the services. The question that this trend gives rise to is how the interaction with the secondary market affects the performance of the supply chain in terms of its intracompetition and thereby its profit. We show that for a wide range of service rates, the second-hand market coordinates the supply chain by either reducing the double marginalization effect or by offsetting it with extra profits gained by servicing the used goods. This, however, does not imply that both parties always improve their profits. Furthermore, we find that when the service rates are low, the supply chain would be better off if the goods were not durable thereby precluding the very existence of the second-hand market.     

Empirical investigation of channel reactions to brand introductions

We investigate how incumbent manufacturers and retailers alter their pricing behavior in response to new product introduction. In performing our analysis, we need to be cognizant of the fact that the observed price changes can be due to entry-induced changes in a) demand conditions or b) costs or, on the other hand, to the competitive behavior of c) manufacturers and/or d) the retailer. In order to separate these four changes, we posit that manufacturer and retailer pricing is an outcome of maximizing a combination of shares and profits. This enhanced objective function allows us to measure competitive conduct benchmarked as less or more competitive than under the Bertrand-Nash framework. Our empirical analysis is based on the toothpaste category for the time period January 1993–February 1995. During this period, there were three brand introductions in two rounds of entry. Using the estimates from the demand and the supply model, we compute the changes in the retail and wholesale prices that are attributable to changes in demand conditions, manufacturer and retailer competitive conduct, and cost changes. These results support our conjecture that inferring the change in conduct solely based on a change in observed prices is likely to be erroneous. For the first new brand entry, we find that the brand introduction did not significantly increase competition between manufacturers. As a result, the balance of channel power between the manufacturers and the retailers remained unaltered. Both retailer and manufacturer profit margins increased after the first entry. However, subsequent to the second entry, retailer share of channel profits increased at the expense of the manufacturers; manufacturers even saw a decline in their absolute profit margins. We believe that this research will provide insight for manufacturers and retailers regarding how the various channel participants are likely to react to new product introduction. Furthermore, policymakers interested in understanding competitive reactions to new product introduction should find this research useful.     

Optimal Guaranteed Profit Margins for Both Vendors and Retailers in the Fashion Apparel Industry

Guaranteed profit margin (GPM) is one of the chargebacks that retailers frequently employ in the fashion industry. With this stipulation, the store demands a vendor's guarantee of its target mark-up rate, even in a markdown operation. This makes the retailer order too much and later liquidate a greater amount of leftovers. We propose a new GPM scheme for supply chain coordination. Specifically, if the retailer compensates the vendor for the same fraction of the joint costs as the guaranteed mark-up rate, the retailer's quantity choice results in profit maximization for the entire supply chain. Thus, the supply chain becomes fully coordinated and provides win-win outcomes for both retailer and vendor.     

Entry mode selection and its impact on an incumbent supply chain coordination

This paper considers a supply chain where a manufacturer sells its product through a retailer. In such a market, a potential entrant can make a substitute product by imitating the incumbent's product and then sells it to the common market with one of three alternative entry modes: (i) selling through the incumbent's retailer, (ii) selling through another independent retailer, or (iii) selling directly to consumers. Faced with the entrant's entry, the manufacturer has managed to offer a value-added service to add to its product's value at a cost. We investigate the entrant's optimal entry mode when the manufacturer offers profit-sharing contracts to the retailer and when it does not, and discuss the impact of the potential invader's entry on the incumbent firms' performances. The results show that: (1) the entrant sells directly to consumers when faced with weak value competition, and sells through another retailer against fierce value competition. (2) If the value competition is relatively fierce and the efficiency of the value-added service is relatively high as well, the incumbent firms can benefit from the new entry. (3) A profit-sharing contract, as a coordination policy, can fully coordinate the incumbent supply chain no matter whether there exists a potential entrant or not, yet the entry can affect the distribution of the profits between the incumbent manufacturer and retailer.     

Developing a framework to improve retail category management through category captain arrangements

Manufacturers and retailers have divergent profit objectives. A manufacturer wants to maximize the profits of its own brands. The retailer, on the other hand, wants to maximize the profit of the entire product category. In spite of these apparently diverging profit objectives, both manufacturers and retailers are increasingly realizing that profit margins of both can be increased through cooperation rather than confrontation. Category management is one such cooperative strategy that often involves the appointment of a leading manufacturer as the “category captain”. A category captain advises the retailer on the best way to price, display, and promote products in a category, including those of the competitors. This arrangement, therefore, ensures retail efficiency but raises doubt about possible misuse of power by the category captain to circumvent fair competition. In this paper, we outline the antitrust concerns about this arrangement, and provide a framework that effectively addresses these concerns.     

Dynamic cooperative promotion in the presence of consumer reference effect with competing retailers

This paper studies the cooperative promotion problem in the presence of the promotion reference effect. We consider retailer price-reduction promotion activities that enhance their sales but may impair brand image for the manufacturer. Moreover, because frequently used promotion induces a promotion reference effect on customers, we investigate how the promotion reference effect influences cooperative control strategies. We do so by examining the context in a supply chain with one leading manufacturer and two competing retailers, where the manufacturer implements a cooperative promotion program for the retailers. We use differential game models vis-a-vis dynamic promotion control strategies and cooperative promotion strategies under the scenario of existence and non-existence of the reference effect. Findings show that the presence of a promotion reference effect increases profit for the manufacturer but generates reduced profit for the retailers. We also find that the manufacturer augments the level of national brand advertising when incorporating the reference effect, and retailers raise (lower) their degree of promotion when the negative effect is low (high).