Pricing And Service Strategy For Retailer’s Dual-channel Supply Chain

Rapid development of Internet, security of electronic payment and higher logistics level make online shopping become normal which also inspired retailers expand their business from offline channels to online channels. Online channels enrich the sales way of retailer and make more profits because of low cost and fast communication and strong flexibility. Online channels also have some problems such as imbalance logistics service and network risk. When online channels open, some offline market shares will be transferred to online channels. The relations between two channels are competitive and cooperative in which price strategy and service strategy are worth studying.In this paper we discussed a retailer with online channels has opened offline channels. Supported delivery time as online service factor, we also considered price and consumer acceptance of online channel as influence factors to find the conditions when open dual channel or one and the corresponding price strategy. Respectively, the retailer’s channel strategy and price strategy was given when the logistics cost is linear with time or piecewise linear with time. We presented the optimal price and service strategy when the retailer opens dual-channel with identical price. In the situation of competition with online channels or offline channels, we assumed the retailer as leader and the competitors as follower to analyz how the retailer who used identical pricing strategy to make decision based on Stackelberg game theory. It showed the optimal price strategy and service strategy in two competitions and the effect on price and demand when service level changes. Finally the numerical experiments verified the conclusions and the profits which is difficult to explain with theoretical analysis. The relations among price, service and profits was proposed. Especially, we showed the transferring how to affect profits when consumers transfer between online channels and offline channels.