[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v65y2022ics0969698921004148.html
   My bibliography  Save this article

Shopping in the omnichannel supply chain under price competition and product return

Author

Listed:
  • Jena, Sarat Kumar
  • Meena, Purushottam
Abstract
In recent years, omnichannel retailing has created value for prospective consumers. The rise of omnichannel retailing has changed consumers' buying habits, and manufacturers are facing stiff competition from retailers. To reduce this competition effect, manufacturers and retailers often work together to reduce showroom display costs. Despite this practice, there is little understanding of how omnichannel retailing impacts supply chain (SC) profit under competitive conditions. We investigate the test-in-store-and-buy-online (TSBO) retailing strategy and its impact on SC profit and price competition between manufacturers. The retailer sells products of both manufacturers through its website but displays products of only one manufacturer in the showroom, which bears the displaying cost. The retailer adopts a return policy for the other manufacturer. Stackelberg game was used to examine how members of the chain interact, and Nash equilibrium was used to find optimal strategies for players under decentralized and integrated channels. The results show that the TSBO strategy in retailing benefits all supply chain players under the integrated channel. A further interesting finding is that omnichannel SC profits are highest when retailers adopt a return policy. When two manufacturers compete and adopt different sales models, the manufacturer who uses the TSBO retail model reaps the most profit. Several other managerial insights are drawn from sensitivity analyses.

Suggested Citation

  • Jena, Sarat Kumar & Meena, Purushottam, 2022. "Shopping in the omnichannel supply chain under price competition and product return," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:joreco:v:65:y:2022:i:c:s0969698921004148
    DOI: 10.1016/j.jretconser.2021.102848
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698921004148
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2021.102848?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sarat K. Jena & Purushottam L. Meena, 2019. "Price and Service Competition in a Tourism Supply Chain," Service Science, INFORMS, vol. 11(4), pages 279-291, December.
    2. Qingying Li & Jianheng Zhou, 2019. "A horizontal capacity reservation game under asymmetric information," International Journal of Production Research, Taylor & Francis Journals, vol. 57(4), pages 1103-1118, February.
    3. Reinartz, Werner & Wiegand, Nico & Imschloss, Monika, 2019. "The impact of digital transformation on the retailing value chain," International Journal of Research in Marketing, Elsevier, vol. 36(3), pages 350-366.
    4. Xiaomin Zhao & Shuhui Hu & Xiaoxiao Meng, 2020. "Who should pay for return freight in the online retailing? Retailers or consumers," Electronic Commerce Research, Springer, vol. 20(2), pages 427-452, June.
    5. Elie Ofek & Zsolt Katona & Miklos Sarvary, 2011. ""Bricks and Clicks": The Impact of Product Returns on the Strategies of Multichannel Retailers," Marketing Science, INFORMS, vol. 30(1), pages 42-60, 01-02.
    6. Sunil Chopra, 2016. "How omni-channel can be the future of retailing," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 43(2), pages 135-144, June.
    7. Fei Gao & Xuanming Su, 2017. "Online and Offline Information for Omnichannel Retailing," Manufacturing & Service Operations Management, INFORMS, vol. 19(1), pages 84-98, February.
    8. Zhang, Juzhi & Xu, Qingyun & He, Yi, 2018. "Omnichannel retail operations with consumer returns and order cancellation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 308-324.
    9. Fei Gao & Xuanming Su, 2017. "Omnichannel Retail Operations with Buy-Online-and-Pick-up-in-Store," Management Science, INFORMS, vol. 63(8), pages 2478-2492, August.
    10. Vibhanshu Abhishek & Kinshuk Jerath & Z. John Zhang, 2016. "Agency Selling or Reselling? Channel Structures in Electronic Retailing," Management Science, INFORMS, vol. 62(8), pages 2259-2280, August.
    11. Shi, Xiutian & Dong, Ciwei & Cheng, T.C.E., 2018. "Does the buy-online-and-pick-up-in-store strategy with pre-orders benefit a retailer with the consideration of returns?," International Journal of Production Economics, Elsevier, vol. 206(C), pages 134-145.
    12. David R. Bell & Santiago Gallino & Antonio Moreno, 2018. "Offline Showrooms in Omnichannel Retail: Demand and Operational Benefits," Management Science, INFORMS, vol. 64(4), pages 1629-1651, April.
    13. Bing Jing, 2018. "Showrooming and Webrooming: Information Externalities Between Online and Offline Sellers," Marketing Science, INFORMS, vol. 37(3), pages 469-483, May.
    14. Chen, Jing & Chen, Bintong & Li, Wei, 2018. "Who should be pricing leader in the presence of customer returns?," European Journal of Operational Research, Elsevier, vol. 265(2), pages 735-747.
    15. Jie Jian & Yuyao Zhang & Lin Jiang & Jiafu Su, 2020. "Coordination of Supply Chains with Competing Manufacturers considering Fairness Concerns," Complexity, Hindawi, vol. 2020, pages 1-15, February.
    16. Radhi, Mohannad & Zhang, Guoqing, 2019. "Optimal cross-channel return policy in dual-channel retailing systems," International Journal of Production Economics, Elsevier, vol. 210(C), pages 184-198.
    17. Kong, Ruixiao & Luo, Li & Chen, Liuxin & Keblis, Matthew F., 2020. "The effects of BOPS implementation under different pricing strategies in omnichannel retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    18. Yuelin Shen, 2018. "Platform retailing with slotting allowance and revenue sharing," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(7), pages 1033-1045, July.
    19. Tatyana Chernonog, 2021. "Strategic information sharing in online retailing under a consignment contract with revenue sharing," Annals of Operations Research, Springer, vol. 300(2), pages 621-641, May.
    20. Steven A. Matthews & Nicola Persico, 2007. "Information Acquisition and Refunds for Returns," Carlo Alberto Notebooks 54, Collegio Carlo Alberto.
    21. Modak, Nikunja Mohan & Kelle, Peter, 2019. "Managing a dual-channel supply chain under price and delivery-time dependent stochastic demand," European Journal of Operational Research, Elsevier, vol. 272(1), pages 147-161.
    22. Yan, Yingchen & Zhao, Ruiqing & Xing, Tiantian, 2019. "Strategic introduction of the marketplace channel under dual upstream disadvantages in sales efficiency and demand information," European Journal of Operational Research, Elsevier, vol. 273(3), pages 968-982.
    23. Mandal, Prasenjit & Basu, Preetam & Saha, Kushal, 2021. "Forays into omnichannel: An online retailer’s strategies for managing product returns," European Journal of Operational Research, Elsevier, vol. 292(2), pages 633-651.
    24. Li, Gang & Zhang, Tao & Tayi, Giri Kumar, 2020. "Inroad into omni-channel retailing: Physical showroom deployment of an online retailer," European Journal of Operational Research, Elsevier, vol. 283(2), pages 676-691.
    25. Saha, Kushal & Bhattacharya, Subir, 2021. "‘Buy online and pick up in-store’: Implications for the store inventory," European Journal of Operational Research, Elsevier, vol. 294(3), pages 906-921.
    26. Davis, Scott & Hagerty, Michael & Gerstner, Eitan, 1998. "Return policies and the optimal level of "hassle"," Journal of Economics and Business, Elsevier, vol. 50(5), pages 445-460, September.
    27. Jin, Delong & Caliskan-Demirag, Ozgun & Chen, Frank (Youhua) & Huang, Min, 2020. "Omnichannel retailers’ return policy strategies in the presence of competition," International Journal of Production Economics, Elsevier, vol. 225(C).
    28. Liu, Weihua & Yan, Xiaoyu & Wei, Wanying & Xie, Dong, 2019. "Pricing decisions for service platform with provider’s threshold participating quantity, value-added service and matching ability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 410-432.
    29. Anantaram Balakrishnan & Shankar Sundaresan & Bo Zhang, 2014. "Browse-and-Switch: Retail-Online Competition under Value Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 23(7), pages 1129-1145, July.
    30. Xiaogang Lin & Yong-Wu Zhou, 2019. "Pricing policy selection for a platform providing vertically differentiated services with self-scheduling capacity," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 70(7), pages 1203-1218, July.
    31. Chen, Bintong & Chen, Jing, 2017. "When to introduce an online channel, and offer money back guarantees and personalized pricing?," European Journal of Operational Research, Elsevier, vol. 257(2), pages 614-624.
    32. Xu, Xiaoping & Zhang, Mian & He, Ping, 2020. "Coordination of a supply chain with online platform considering delivery time decision," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    33. Huihui Liu & Shuguang Sun & Ming Lei & Honghui Deng & G. Keong Leong, 2017. "The impact of retailers’ alliance on manufacturer’s profit in a dual-channel structure," International Journal of Production Research, Taylor & Francis Journals, vol. 55(22), pages 6592-6607, November.
    34. Jin, Ming & Li, Gang & Cheng, T.C.E., 2018. "Buy online and pick up in-store: Design of the service area," European Journal of Operational Research, Elsevier, vol. 268(2), pages 613-623.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sarkar, Biswajit & Seok, Hyesung & Jana, Tapas Kumar & Dey, Bikash Koli, 2023. "Is the system reliability profitable for retailing and consumer service of a dynamical system under cross-price elasticity of demand?," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    2. Hota, Soumya Kanti & Sarkar, Biswajit & Ghosh, Santanu Kumar & Cheikhrouhou, Naoufel & Treviño-Garza, Gerardo, 2024. "What should be the best retail strategy to deal with an unequal shipment from an unreliable manufacturer?," Journal of Retailing and Consumer Services, Elsevier, vol. 76(C).
    3. He, Peng & He, Yong & Zhou, Li, 2023. "Channel strategies for dual-channel firms to counter strategic consumers," Journal of Retailing and Consumer Services, Elsevier, vol. 70(C).
    4. Wei, Jie & Chang, Meijing & Zhao, Jing, 2023. "Price matching and product differentiation strategies considering showrooming," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    5. Mishra, Mowmita & Ghosh, Santanu Kumar & Sarkar, Biswajit & Sarkar, Mitali & Hota, Soumya Kanti, 2024. "Risk management for barter exchange policy under retail industry," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    6. Dey, Bikash Koli & Sarkar, Mitali & Chaudhuri, Kripasindhu & Sarkar, Biswajit, 2023. "Do you think that the home delivery is good for retailing?," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    7. Zhao, Ying & Guan, Zhi-min & Zhang, Jun, 2023. "Return freight strategies and selling formats in e-commerce supply chain: The perspective of consumer fairness concerns and online shopping returns," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    8. Sohani, Sahar & Barman, Tuli & Sarkar, Biswajit & Gunasekaran, Angappa & Pareek, Sarla, 2024. "Retail management policy through firefly algorithm under uncertainty using Dempster-Shafer theory for production firm," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).
    9. Xuelong Zhang & Huili Xu & Chenhui Zhang & Shuang Xiao & Ying Zhang, 2022. "Pricing Decision Models of the Dual Channel Supply Chain with Service Level and Return," Energies, MDPI, vol. 15(23), pages 1-13, December.
    10. Zhang, Hui & Sun, Qi, 2024. "The transformation mechanism of fitness clubs: Pricing of joint fitness courses by online platforms and well-known coaches," Journal of Retailing and Consumer Services, Elsevier, vol. 76(C).
    11. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
    12. Chauhan, Ruchi & Majumder, Arunava & Kumar, Varun, 2023. "The impact of adopting customization policy and sustainability for improving consumer service in a dual-channel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    13. Davoudi, Zahra & Seifbarghy, Mehdi & Sarkar, Mitali & Sarkar, Biswajit, 2023. "Effect of bargaining on pricing and retailing under a green supply chain management," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
    2. Li, Zonghuo & Wang, Di & Yang, Wensheng & Jin, Hyun Seung, 2022. "Price, online coupon, and store service effort decisions under different omnichannel retailing models," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    3. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    4. Jin, Delong & Caliskan-Demirag, Ozgun & Chen, Frank (Youhua) & Huang, Min, 2020. "Omnichannel retailers’ return policy strategies in the presence of competition," International Journal of Production Economics, Elsevier, vol. 225(C).
    5. Mandal, Prasenjit & Basu, Preetam & Saha, Kushal, 2021. "Forays into omnichannel: An online retailer’s strategies for managing product returns," European Journal of Operational Research, Elsevier, vol. 292(2), pages 633-651.
    6. Xu, Xiaoping & Zhang, Mian & He, Ping, 2020. "Coordination of a supply chain with online platform considering delivery time decision," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    7. Sun, Yanhong & Wang, Zihan & Han, Xiaohua, 2020. "Supply chain channel strategies for online retailers: Whether to introduce web showrooms?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    8. Jiu, Song, 2022. "Robust omnichannel retail operations with the implementation of ship-from-store," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    9. Subrata Mitra, 2022. "Economic models of price competition between traditional and online retailing under showrooming," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(1), pages 29-63, March.
    10. Yan, Shuai & Archibald, Thomas Welsh & Han, Xiaohua & Bian, Yiwen, 2022. "Whether to adopt “buy online and return to store” strategy in a competitive market?," European Journal of Operational Research, Elsevier, vol. 301(3), pages 974-986.
    11. He, Yi & Xu, Qingyun & Shao, Zhen, 2021. "“Ship-from-store” strategy in platform retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    12. Shen, Yinhai & Zhang, Qing & Zhang, Zhichao & Ma, Xinyu, 2022. "Omnichannel retailing return operations with consumer disappointment aversion," Operations Research Perspectives, Elsevier, vol. 9(C).
    13. Yang, Guangyong & Ji, Guojun, 2022. "The impact of cross-selling on managing consumer returns in omnichannel operations," Omega, Elsevier, vol. 111(C).
    14. Hübner, Alexander & Hense, Jonas & Dethlefs, Christian, 2022. "The revival of retail stores via omnichannel operations: A literature review and research framework," European Journal of Operational Research, Elsevier, vol. 302(3), pages 799-818.
    15. Yi He & Qianqian Xu & Da Zhao, 2020. "Impacts of the BOPS Option on Sustainable Retailing," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    16. Peng He & Tong-Yuan Wang & Qi Shang & Jun Zhang & Henry Xu, 2024. "Knowledge mapping of e-commerce supply chain management: a bibliometric analysis," Electronic Commerce Research, Springer, vol. 24(3), pages 1889-1925, September.
    17. Li, Qi & Wang, Quansheng & Song, Peijian, 2022. "Do customers always adopt buy-online-and-pick-up-in-store service? Consideration of location-based store density in omni-channel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    18. Kong, Ruixiao & Luo, Li & Chen, Liuxin & Keblis, Matthew F., 2020. "The effects of BOPS implementation under different pricing strategies in omnichannel retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    19. Zhou, Yong-Wu & Zhang, Xiong & Zhong, Yuanguang & Cao, Bin & Cheng, T.C. Edwin, 2021. "Dynamic pricing and cross-channel fulfillment for omnichannel retailing industry: An approximation policy and implications," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    20. Yang, Lu & Li, Xiangyong & Xia, Ye & Aneja, Y.P., 2023. "Returns operations in omnichannel retailing with buy-online-and-return-to-store," Omega, Elsevier, vol. 119(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:65:y:2022:i:c:s0969698921004148. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.