Impacts of Online and Offline Channel Structures on Two-Period Supply Chains with Strategic Consumers

Abstract

In this paper, the effects of strategic consumer behaviors have been investigated and analyzed with regard to online retailers and offline retailers in a dual-channel supply chain. Four channel structures (i.e., no-promotion, a direct online channel, a retail offline channel, and dual channels introduced in the promotion sales period) are considered. At the beginning of the paper, the original demand functions of a dual-channel supply chain incorporating the consumers’ utility has been introduced. The results indicate that despite improved consumer patience, all promotional prices do not fall as expected. When sales channels are provided by online retailers rather than offline retailers during the promotion period, offline retailers can achieve higher profits. We also find that in most cases, a dual-channel model in a single-period is more beneficial to both online and offline retailers than a dual-channel model in two periods, which is, to a certain extent, contrary to the existing literature of single sales channel.