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The impact of online sales on centralised and decentralised dual-channel supply chains

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  • Ilkyeong Moon
  • S.P. Sarmah
  • S. Saha

Abstract

This paper studies a supply chain structure featuring two different types of distribution channels through which manufacturers sell products. The centralised and decentralised distribution channels considered in this study are affected by online sales outside the structured channels. In the centralised distribution channel, two retail stores located in geographically distinct markets are operated by a single owner. In the decentralised distribution channel, two retailers independently operate two retail stores. In the non-cooperative scenario, the manufacturer always prefers the decentralised distribution channel irrespective of whether an online channel is used. To achieve channel coordination, a revenue-sharing contract is applied, but it can be used to coordinate only the decentralised distribution system. Therefore, a modified revenue-sharing contract is proposed to coordinate the centralised distribution system. The analytical study reveals that without coordination among the channel members, the manufacturer always earns maximum profit in decentralised distribution systems. However, if the supply chain is coordinated, then the manufacturer receives more benefits from using the centralised distribution systems under certain conditions. Propositions are presented to describe the characteristics of distribution structures, and to provide meaningful management guidelines for coordinating them. Extensive numerical investigations are also presented. [Received 20 January 2016; Revised 13 December 2016, 9 March, 4 August 2017; Accepted 25 September 2017]

Suggested Citation

  • Ilkyeong Moon & S.P. Sarmah & S. Saha, 2018. "The impact of online sales on centralised and decentralised dual-channel supply chains," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 12(1), pages 67-92.
    • Handle: RePEc:ids:eujine:v:12:y:2018:i:1:p:67-92
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    Citations

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    Cited by:

    1. Nielsen, Izabela Ewa & Saha, Subrata, 2018. "Procurement planning in a multi-period supply chain: An epiphany," Operations Research Perspectives, Elsevier, vol. 5(C), pages 383-398.
    2. Xiaojing Zheng, 2022. "The Coordination of Multi-Stage Discounts in a Dual Channel Fresh Agricultural Produce Supply Chain: Minimizing the Loss of Quantity and Quality," Sustainability, MDPI, vol. 14(4), pages 1-28, February.
    3. Feng Fu & Shuangying Chen & Wei Yan, 2023. "Implications of e-tailers’ transition from reselling to the combined reselling and agency selling," Electronic Commerce Research, Springer, vol. 23(3), pages 1885-1920, September.
    4. Dongyan Chen & Chunying Tian & Zhaobo Chen & Ding Zhang, 2022. "Competition among supply chains: the choice of financing strategy," Operational Research, Springer, vol. 22(2), pages 977-1000, April.

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