Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms? (English) Zbl 07769676
Summary: More and more online manufacturers collaborate with offline retailers who provide retail services to showcase products in offline retailers’ stores and feature the stores as physical showrooms. Since offline retailers may be noncompeting or competing depending on the product they sell, we investigate two collaboration strategies. Our results show that product competition causes the decreased demand that is realized through physical showroom (negative competition effect) and the increased demand to buy online directly (positive spillover effect) for the online manufacturer. When the positive spillover effect dominates the negative competition effect, the online manufacturer prefers to partner with the competing retailer and strategically sets a high price. Interestingly, the online manufacturer’s willingness to partner with the competing retailer may increase with competing product value. Besides, the online manufacturer may benefit from the increased value of the competing product and the increased commission that is paid to the retailer under product competition.
{© 2020 The Authors. International Transactions in Operational Research © 2020 International Federation of Operational Research Societies}
{© 2020 The Authors. International Transactions in Operational Research © 2020 International Federation of Operational Research Societies}
MSC:
| 90-XX | Operations research, mathematical programming |
Keywords:
supply chain management; online-to-offline channel strategy; physical showroom; retail service; product competitionReferences:
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