Analysis Of The Dual-channel Pricing Strategies And Development Prospect Of Retailers

With the forming and development of e-commerce and consumer online shopping habits, online shopping is becoming an important channel for consumption. Winning on its convenience as well as time and geographical free characters, online shopping could meet the diverse needs of consumers, which also laid a solid foundation of strategic transformation for traditional retailers. Therefore, traditional retailers has began to introduce the online channels and transformed into dual-channel retailers.This paper employs the Salop circle model to discuss the dual-channel retailer’s pricing strategies. By establishing two circular markets about "multiple dual-channel retailers and multiple traditional retailers " as well as " multiple dual-channel retailers and one traditional retailer", this paper bases on the condition that consumers have no preference to two channels and sets the ratio of net purchase additional costs and unit transportation cost as variables.Additionally, based on the target of maximizing the total profit of dual-channel retailers and traditional retailer, this paper finds out the market demand, pricing and the optimal equilibrium profit of each retailer when the two markets are equilibrium. Moreover, this paper analyzes the impact of changes in stores on all the three dependent variables. Meanwhile, through comparing and analyzing each dependent variable when the market is equilibrium, we could get the impact of changes in dual-channel retailers on the dependent variables.Conclusions indicate that:if the number of stores is excessive and the extra cost of online shopping is high or the unit transportation cost is low (Traffic is convenient), then the introduction of dual-channel strategy may not necessarily bring advantages. As to pricing, dual-channel retailers should launch different strategies for two channels which refers to online shopping channels should be priced lower than those traditional ones, but the comparison with the traditional physical stores’pricing should consider changes in multiple factors. When the number of stores is fixed and both dual-channel retailers and traditional retailers coexist in the market, then the introduction of dual channel is meaningless if the number of the dual-channel retailers is up to80%.