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Retail services and firm profit in a dual-channel market

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  • Yan, Ruiliang
  • Pei, Zhi

Abstract

With the rapid development of the Internet, many manufacturers nowadays use online technology to engage in direct sales. The mix of retailing with a direct channel adds a new dimension of competition and complementarity to a product's distribution channels. Our model focuses on the strategic role played by the retail services in a dual-channel competitive market. The manufacturer uses a direct channel as an effective tool to motivate the retailer to improve its retail services and profits from it. While operated by the manufacturer to motivate retailer to perform more effectively from the manufacturer's perspective, the direct channel may not always be detrimental to the retailer because the retailer can obtain a lower wholesale price from the manufacturer and a higher sales volume from the improved retail services. In our research, our results suggest that the improved retail services effectively alleviate the channel competition and conflict and improve the supply chain performance in a competitive market.

Suggested Citation

  • Yan, Ruiliang & Pei, Zhi, 2009. "Retail services and firm profit in a dual-channel market," Journal of Retailing and Consumer Services, Elsevier, vol. 16(4), pages 306-314.
    • Handle: RePEc:eee:joreco:v:16:y:2009:i:4:p:306-314
    DOI: 10.1016/j.jretconser.2009.02.006
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    References listed on IDEAS

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