For showing only, for selling only, or for hybrid? Physical store deployment for a manufacturer in online retailing

Abstract

AbstractManufacturers in online retailing are exploring a physical store option: showroom, retail store, or hybrid model. We've built game‐theoretic models to study their deployment strategies and channel preferences of e‐tailers and consumers. Our analysis reveals that manufacturers opt for a hybrid store with a small showrooming effect, showroom with a significant effect, but rarely a retail store. Consumers generally favor manufacturers introducing an offline channel while e‐tailers prefer this when the online channel has a large market share. When the online channel dominates, e‐tailers are more motivated to choose a hybrid store while consumers lean towards a showroom.