A Supply Chain Decision-making Model Based On Consumer Channel Preference

With the rapid development of the Internet and logistics network, manymanufacturers are increasingly adopting dual-channel to sell their products. Byengaging in direct sale, the manufacturer can reach different customer segments thatcannot be achieved by the traditional retail channel, expand market coverage, controlsale price and increase their own profits. As a result, retailers have incentive to improvetheir retail services, reduce distribution and inventory costs in order to improvecompetitive advantage and profitability.The paper first examines the impacts of retail innovation and customer acceptance ofdirect channel on both supply chain players and the whole supply chain in thecircumstance of dual-channel supply chain. The results suggest that the manufactureruses the direct channel as an effective tool to motivate the retailer to improve itsinnovation investment and profits from it. At this time, the direct channel may benefitthe retailer because it can obtain a lower wholesale price from the manufacturer and ahigher sales volume from the improved retail innovation investment. And the retailinnovation can effectively alleviate the channel competition and conflicts. Thus thesupply chain performance in competitive market is improved.By analyzing the effects of retail value-added services and customer acceptance ofdirect channel on the pricing behaviors of manufacturer and retailer, the optimaldecisions of pricing and service strategy in centralized and decentralized dual-channelsupply chain with retailer’s investment in value-added services are investigated. Theresults show that the manufacturer may control the retail price by adding a directchannel and setting its wholesale price and direct sale price. The retailer value-addedservices and customer acceptance of direct channel both strongly influence the pricingstrategies and profits of the two players. When the optimal level of value-added serviceis less than a certain threshold, the optimal wholesale price and direct sales price indecentralized dual-channel supply chain are identical to the optimal retail price and theoptimal direct sales price in centralized dual-channel supply chain respectively.Otherwise, the manufacturer will set the direct sales price equal to the wholesale price.