Multichannel retailing and price competition

Karray, Salma; Sigué, Simon Pierre

doi:10.1111/itor.12835

Cited by 10 publications

(12 citation statements)

References 30 publications

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“…It reminds an online manufacturer that collaborating with a competing retailer who has a competitive advantage can also be optimal. Furthermore, we find that the online manufacturer strategically sets a high price when its optimal strategy is to partner with the competing retailer, which is inconsistent with the previous literature showing that product competition lowers product price (Nasser et al., 2013; Karray and Sigué, 2021). These results indicate that the online manufacturer should adopt a “high price and low demand” strategy under product competition when implementing the online‐to‐offline channel strategy.…”

Section: Discussioncontrasting

confidence: 99%

“…Proposition 2 shows that the manufacturer strategically sets a higher price when collaborating with the competing retailer than that under the noncompeting case. This result is contrary to the intuition that product competition would force the manufacturer to lower its product price (e.g., Nasser et al., 2013; Karray and Sigué, 2021), since competing firms can only obtain a larger market share by lowering product price rather than other decisions. However, the retailer could adjust service decision when facing product competition in our work.…”

Section: Optimal Online‐to‐offline Channel Strategycontrasting

confidence: 72%

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Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Bin

Zhang

Guan

et al. 2020

Int Trans Operational Res

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More and more online manufacturers collaborate with offline retailers who provide retail services to showcase products in offline retailers’ stores and feature the stores as physical showrooms. Since offline retailers may be noncompeting or competing depending on the product they sell, we investigate two collaboration strategies. Our results show that product competition causes the decreased demand that is realized through physical showroom (negative competition effect) and the increased demand to buy online directly (positive spillover effect) for the online manufacturer. When the positive spillover effect dominates the negative competition effect, the online manufacturer prefers to partner with the competing retailer and strategically sets a high price. Interestingly, the online manufacturer's willingness to partner with the competing retailer may increase with competing product value. Besides, the online manufacturer may benefit from the increased value of the competing product and the increased commission that is paid to the retailer under product competition.

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Section: Discussioncontrasting

confidence: 99%

Section: Optimal Online‐to‐offline Channel Strategycontrasting

confidence: 72%

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Bin

Zhang

Guan

et al. 2020

Int Trans Operational Res

View full text Add to dashboard Cite

show abstract

“…We assume symmetric price and service effects on the demands of the online and off-line channels. This assumption is mainly adopted for convenience but also allows us, for example, to set aside the traditional explanation of price discrimination between channels based on the difference in price sensitivity of customers across channels (Grewal et al 2010; Karray and Sigué 2020; Neslin et al 2006). In other words, if there are differences in online and off-line prices in this research, they will be attributed to other factors such as service usage rates.…”

Section: Model Descriptionmentioning

confidence: 99%

Demand-Enhancing Services for Tangible Products in a Distribution System With Online and Off-Line Channels

Martín‐Herrán

Sigué

2021

Journal of Service Research

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Services such as delivery, warranty, and product returns that are bundled with various tangible products play a critical role in their market performance. As manufacturers strive to streamline operations and deliver consistent services across channels, this article analytically examines whether those who sell their products directly online and off-line through retailers should direct control, delegate to retailers, or outsource to third parties the delivery of these services. Our main findings are as follows. Manufacturers should not outsource demand-enhancing services to third parties if they do not ensure relatively low operating costs, as they reduce the level of service provided to customers. Assuming no channel partner has a cost advantage in service delivery, manufacturers should directly control the provision of services that are used identically by online and off-line customers. Manufacturers may not be able to directly and cost effectively offer services that are used differently by online and off-line customers. In such a context, depending on the relative sizes of off-line and online market bases, retailers may be considered either as single providers of the service for both online and off-line customers or jointly with manufacturers as providers for off-line customers only. We discuss the implications of these findings.

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“…Therefore, consumer welfare could increase because of the low price and the mitigation of online disutility costs. In the same vein, Karray and Sigué (2020) study the implications of online channel expansion by one or two competing offline retailers on prices and profits. They explicitly analyze different price competition effects between online and offline channels.…”

Section: Literature Reviewmentioning

confidence: 99%

Modelling offline expansion strategies of online companies

Liu

2021

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Purpose This paper aims to theoretically investigate an online company’s optimal decision on its offline expansion strategy. In the past five years, many large online retailers and internet-based companies such as Amazon, Google, Alibaba, Tencent and JD.com have expanded their offline market but it was observed that they adopted different expansion strategies. Specifically, some of them expand the offline market by acquiring offline retailers, while some do so by purchasing a portion of offline retailer’s stake. This difference leads to a quite different structure in post-expansion market, having an impact on profit, consumer surplus and social welfare. The goal of this paper is to model such expansion strategies in a general way and complete studies on profits and welfare. Design/methodology/approach By constructing a Salop model with two offline retailers and one online company, this paper analyzes the case where the online company can expand its offline market by either acquiring or jointing (e.g. stakeholding) with one offline retailer. The former strategy (named Strategy A) allows the online company to fully control and capture residual claims of the offline retailer. With the adoption of the latter strategy (named Strategy C), on the other hand, the online company can obtain a fixed proportion of its offline partner’s quasi rent. In the price competition, the online company chooses its optimal offline expansion strategy by predicting its profit in the post-expansion market. Findings This paper found that the equilibrium crucially depends on the synergy effect due to online–offline integration, and such synergy also influences both consumer and social welfare. This study shows the various conditions on the synergy that affect an online company moves toward offline markets. Accordingly, this finding can assist online companies with or without retailing business to choose an optimal strategy when expanding offline markets. Moreover, by doing some necessary welfare analysis, this study shows that the online company’s offline expansion is not always benefiting consumers nor be socially desirable, which may shed some lights on the possible competition policy in the case where online companies practice in offline expansion. Originality/value Different from conventional wisdom in online-offline integration, the theory indicates that the offline expectation of online company may not always benefit consumers nor be socially desirable. Moreover, the findings also shed some lights on the possible competition policy in the case where online companies practice in offline expansion.

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Multichannel retailing and price competition

Cited by 10 publications

References 30 publications

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Demand-Enhancing Services for Tangible Products in a Distribution System With Online and Off-Line Channels

Modelling offline expansion strategies of online companies

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