Drop-shipping In Dual-channel Supply Chain Based On Customer Channel Preference

With the development and application of network and information technology, drop-shipping has been widely used in online sales. Retailers receive orders through Internet, then suppliers, who keep the products, directly deliver the goods to consumers based on the orders. Many companies who own retail stores are establishing online channels to expand sales and compete with Internet retailers, due to the growing popularity of online shopping. On the one hand, drop-shipping reduce intermediate links and the cost of supply chain. On the other hand, the optimal inventory decisions are changed under drop-shipping model. Besides, for inventory of the two channels belongs to different decision maker, they will make the decision for their own sake, which will decrease the efficient of the system. Therefore, the deep research of drop-shipping in dual-channel supply chain is helpful for traditional enterprises to sell online.In this paper, we study drop-shipping in dual-channel supply chain. The demand of retail and online channels are based on customer preferences. In chapter three, we analyze channel selection strategy of supplier and retailer. Comparing the drop-shipping model with traditional supply chain model, conditions which two parts are willing to adopt drop-shipping are obtained. Then in chapter four, optimal inventory policy in dual-channel drop-shipping supply chain is studied under three conditions:centralized, decentralized and outsourcing. Optimal solutions are obtained and compared. Sensitivity analysis is used to analyze the impact of customer channel preferences and other factors on the optimal inventory and profits. Finally in chapter five, dual-channel drop-shipping supply chain coordination is studied. We propose price discounts and compensation contract and commitment contract to coordinate the supply chain.The significance of this article is that we study the drop-shipping in dual-channel supply chain based on customer preferences. It extends the existing research on drop-shipping and provides some guidelines for enterprises to choose and take advantage of this mode.