Influence of logistic service level on multichannel decision of a two-echelon supply chain

Abstract

This paper investigates the channel structure and pricing problem of a two-echelon supply chain consisting of a manufacturer and a retailer. There are four common channel structures: (1) traditional retail channel, (2) the retailer’s traditional and online channel, (3) traditional retail channel and the manufacturer’s online channel, (4) traditional retail channel and online channel of a manufacturer and a retailer. Four Models (Model R, Model RD, Model MR, and Model MRD) are established and analysed based on four channel structures. Considering the influence of logistic services on consumers’ channel choice, this paper uses Stackelberg game and consumer utility function to analyse the profit of the manufacturer, the retailer and the whole supply chain, and obtains the optimal channel strategy of the manufacturer and the retailer in the four models. In addition, our study also finds that First, the manufacturer’s online channel opening can indirectly stimulate consumers to buy products in the traditional retail channel, which increases the demand for traditional retail channel. Second, the manufacturer’s online channel is more conducive to improving the profit of the whole supply chain than the retailer’s online channel under the dual channel structure. Third, multiple channels consisting of traditional retail channel and online channel of the manufacturer and the retailer can provide consumers with the lowest retail price, which is most beneficial to the retailer.

Keywords:

• logistic service level
• multichannel market
• e-commerce
• pricing
• channel strategy
• stackelberg game

Disclosure statement

No potential conflict of interest was reported by the authors.

Acknowledgements

The authors thank the editor and the anonymous reviewers for their valuable suggestions that have significantly improved this paper.

ORCID

Bo Yan http://orcid.org/0000-0002-5764-7732

Additional information

Funding

This work was supported by National Natural Science Foundation of China (71871098), Humanities and Social Sciences Research Planning Fund Project of the Ministry of Education (18YJA630127), Natural Science Foundation of Guangdong Province (2017A030313415), Philosophical and Social Sciences Planning Project of Guangzhou (2019GZGJ05), and Fundamental Research Funds for the Central Universities (ZDPY201914).