TITLE:
Pricing Strategy in Multi-Channel Apparel Supply Chain with Showrooming Effect
AUTHORS:
Shanshan Wang, Daofang Chang, Tian Luo
KEYWORDS:
Showrooming, Sales Effort, Multi-Channel Apparel Supply Chain, Surplus Profit-Sharing Contract
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.10 No.4,
April
17,
2020
ABSTRACT: In the apparel supply chain, brick-and-mortar stores rely on sales effort to increase demand. However, the cross channel free-riding behavior of “experience offline, purchase online” will harm sales profit of physical stores. In order to solve the problem, this paper considers a multi-channel apparel supply chain consisting of an upstream manufacturer and a downstream retailer, where the manufacturer opens an online direct channel and the retailer opens offline and online channels. First, a Stackelberg game model is established between the manufacturer and the retailer. Then we study equilibrium retail prices, the sales effort level and the supply chain performance under centralized decision, decentralized decision and surplus profit-sharing (SPS) decision. Finally, the optimal results in the three decisions are compared and analyzed from perspectives of the manufacture, the retailer and the whole supply chain. Our research results show that: 1) surplus profit-sharing contract can improve retailer service level and supply chain profits, which also could avoid price competition among three channels and alleviate the negative impact of showrooming. 2) The greater the showrooming effect in multi-channels, the less the supply chain profits will get. 3) It is beneficial for the retailer to add a retailer’s online channel on typical dual channels.