A Study On Service Policy Of Retailers With Consideration Of Consumers' Free-riding Behavior

The rapid development of online retailing and logistics has changed the modern business model."Online shopping" has become a new way of popular consumption.With the coexistence of physical store and online store,excellent shopping experience and low price is the first choice for consumers.The physical store provides experience service,but price has been high;Online shopping is more convenient and has the low price advantage,but there is a physical inconsistent with the expected,product loss or damage and other risks.So "go to experience in physical store,buy online" this free ride behavior is more and more welcomed by consumers.Based on consumers' free riding behavior in dual supply chain,consumers'shopping ways include three categories:shopping at physical stores,shopping online and free riding,with the consideration of consumer heterogeneity in willingness to pay and travel costs.The manufacturer's and retailer's dual supply chain model are established to analyze the retailer's service policy with potential free-riding consumers.Through an extensive numerical study,the impact of consumers' free-riding behavior on the supply chain and players are analyzed and managerial insights are discussed.In the manufacturer's dual supply chain,the results indicate that when the consumer acceptance of online channel is relatively low,the channel members'profitability is improved by introducing the online channel.However,when it is relatively high,the retailer may refuse to cooperate with the manufacturer since severe competition between the two channels hurts the interests of the retailer.The retailer always inhibits free-riding behaviors when the manufacturer introduces the online channel.It is better for the physical store to provide a high level service under some conditions due to free-riding behavior,so some free-riding consumers preference physical store shopping.In the context of intense competition between online and offline channels,retailers should provide differentiated services based on whether or not consumers will generate purchasing behavior.Under the dual channel structure of the retailer,the optimal service level of the physical store is given in the decentralized decision and integration decision of the physical store and the network store.The results indicate that when the free ride factor is small,consumers will not choose to go to the store but then buy the product online.When the store is easy to ride for free,but the physical service level is low,deliberately free ride behavior will not happen.This behavior can only occur if the level of service in the store is high.When the cost of the unit service is large,it will choose to set a lower service level to curb the free ride behavior.When the service cost coefficient is within the acceptable range,the store retailer will allow the free ride on the market;if the store has the low Cost advantage,it will provide a higher level of service to direct free ride customers to buy in the store,so there is no free ride on the market behavior.Finally,the free-riding behavior prevention strategy are discussed,and the analysis indicate the price comparison strategy between the physical store and online store can effectively avoid free rider behavior and improve the profit of the physical store and online store.