Retail services and firm profit in a dual-channel market |
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| Authors: | Ruiliang Yan Zhi Pei |
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| Institution: | 1. Institute of Operations Research, School of Management, Qufu Normal University, Rizhao 276826, PR China;2. School of Economics and Management, Beihang University, Beijing 100191, PR China;1. Lerner College of Business and Economics, University of Delaware, Newark, DE 19716, USA\n;2. Rowe School of Business, Dalhousie University, Halifax, NS B3H 4R2, Canada;1. Edwards School of Business, University of Saskatchewan, Saskatoon, Saskatchewan, Canada S7N 5A7, Canada;2. The Paul Merage School of Business, University of California, Irvine, California(CA) 92697, United States;1. Institute of Game Behavior and Operations Management, Nanjing University of Finance and Economics, Nanjing 210046, China;2. School of Management Science and Engineering, Nanjing University, Nanjing 210093, China;3. Tuchman School of Management, New Jersey Institute of Technology, University Heights, Newark, NJ 07102, USA |
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| Abstract: | With the rapid development of the Internet, many manufacturers nowadays use online technology to engage in direct sales. The mix of retailing with a direct channel adds a new dimension of competition and complementarity to a product's distribution channels. Our model focuses on the strategic role played by the retail services in a dual-channel competitive market. The manufacturer uses a direct channel as an effective tool to motivate the retailer to improve its retail services and profits from it. While operated by the manufacturer to motivate retailer to perform more effectively from the manufacturer's perspective, the direct channel may not always be detrimental to the retailer because the retailer can obtain a lower wholesale price from the manufacturer and a higher sales volume from the improved retail services. In our research, our results suggest that the improved retail services effectively alleviate the channel competition and conflict and improve the supply chain performance in a competitive market. |
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