Issues on multi-channel supply chains

The dissertation consists of three essays. The main theme is supply chain structural design issues.;Many bricks-and-mortar retailers have transformed themselves to clicks-and-mortar by setting up an Internet channel beside the preexisting one. Despite these industrial practices, several fundamental questions remain: (1) Does it pay off to go online? (2) Is it possible to characterize the equilibrium industry structure? (3) What is the implication of this business model for consumers? Essay 1 investigates these issues in an oligopoly setting. We show that clicks-and-mortar is indeed the equilibrium channel structure. However, we find that this equilibrium structure does not necessarily imply higher profits for the firms---rather, it emerges as a strategic necessity. Consumers are generally better off with the clicks-and-mortar supply chain structures.;Essay 2 studies the free riding issues that arise in multi-channel supply chains. Free riding occurs when one channel engages in the activities necessary to sell a product, while another channel makes the final sale. Although free riding is in general considered to have a negative impact on supply chain performance, certain recent industry practices seem to suggest an opposite view: a manufacturer may purposely induce free riding by setting up a high-end direct store. Essay 2 examines how free riding affects a manufacturer's supply chain structure decision. We consider factors such as the effort required to find and buy the product at a retail store after visiting the direct store, the existence of similar lower-priced competing products, and the degree of consumer need to obtain direct-store service.;In Essay 3, we explore vertical cooperation versus horizontal cooperation. One of the biggest challenges all Internet retailers face is the e-fulfillment process. One common approach is drop-shipping, in which the e-tailer sells products to consumers and then ships them directly from the supplier. However, there is an emerging trend where e-tailers direct their customer demand to traditional retailers (so-called demand referral), and thus outsource the demand fulfillment process to traditional retailers. While drop-shipping seeks vertical cooperation in the supply chain, demand referral seeks horizontal cooperation. We investigate the virtues and shortcomings of each kind of fulfillment approach.