Dual-channel Pricing Strategy Of The Supply Chain, E-commerce Environment

The internet has created a new way for companies and customers to interact manufacturers who had previously been one or more links in the supply chain away from the end users of their products can now reach their customers directly. On one hand, the Internet channel could potentially increase the market for the firm and reduce the costs of operations. On the other hand, a new channel would threaten existing channel due to the competition.In its most parsimonious form, a supply chain consists of a manufacturer, a retailer and customers, we review three dual-channel supply chain models after incorporating the internet into an existing supply chain. This paper introduce non-digital attributes of product in the consumer utility function innovatively, then analyze the pricing strategies of the "forward integration" structure which manufacturers introduce internet channel to compete with its distribution retailer, and the "bricks and clicks " structure - which means retailer introduces a internet channel. We compared the profits of manufacturer and retailer under these strategies, and the optimal prices of dual- channels.The paper concluded that maintain dual-channel product prices in line is more favourable strategy to the manufacturer when there are many people could access the internet,under both the "forward integration" structure and "brick and click on the" structure. In the "bricks and clicks "structure, after the introduction of network channels to maintain the same wholesale price is more favorable strategy to retailer when there are many people could access the internet.This paper also found that online and offline price difference of products will be increase along with the decreases of non-digital product attributes, which is consistents with most of the conclusions of empirical research.