Chen, Xu

Peng, Ying

Wang, Xiaojun

English

In light of the growing prevalence of online and offline mixed channels, in this article, we examine the channel expansion strategy of adding offline store channels to an online direct channel for a manufacturer. Based on the Nash program framework, this article considers two alternative mixed-channel strategies, namely a conventional wholesale channel and a franchise store channel. By comparing the subgame perfect equilibrium solutions of these two mixed-channel formats to the benchmark strategy, where the manufacturer only engages in the online direct channel, we evaluate the effects of the two online-to-store mixed-channel strategies on optimal direct selling prices, the manufacturer's profits, and overall social welfare. The results indicate that a manufacturer's optimal channel expansion strategy is mainly governed by the trade-off between the extra revenue gained from the newly added offline channel and the economic loss from the direct online channel induced by channel competition. The manufacturer's negotiation power, unit production cost, and heterogeneity between the two channels are the key factors determining the relative gains and losses. In addition, our results demonstrate that both online-to-store mixed-channel strategies yield positive effects on social performance compared with the online direct channel

University of Birmingham Research Portal

Online-to-store channel expansion strategies:cost, heterogeneity, and power

https://pure-oai.bham.ac.uk/ws/files/211342833/ChenX2023Online-to-shore_AAM.pdf

Online-to-store channel expansion strategies:cost, heterogeneity, and power

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University of Birmingham Research Portal