Decisions of retail channel choices for the traditional retailer competing with a pure play online retailer Online publication date: Thu, 01-May-2014
by Chao Liu; Ting Zhang; Qinglong Gou; Liang Liang
International Journal of Management and Decision Making (IJMDM), Vol. 13, No. 2, 2014
Abstract: The rapid development of online retailing has promoted some top traditional retailers to implement the brick-and-click strategy by expanding business to online channel. While online channel usually implies lower operation cost, most consumers believe that they will bear disutility cost of purchasing online because of various disadvantages of online shopping. Considering such online disutility cost and the competition from a pure play online retailer, we investigate a traditional retailer's decisions on retail channel choices. In detail, we construct competitive pricing games between the traditional retailer and the pure play online retailer by assuming that consumers are heterogeneous in the online disutility cost, and that for each consumer, his online disutility cost from the online branch of the brick-and-mortar store is lower than that from the pure play online store. Equilibrium results show that introducing an online branch helps the traditional retailer improve overall profitability under certain conditions.
Online publication date: Thu, 01-May-2014
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Management and Decision Making (IJMDM):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email firstname.lastname@example.org