The consumer web-rooming on different sales models and retailing channel expansion

Abstract

In the context of multichannel retailing, the phenomenon of web-rooming, where consumers research online and purchase offline, has become widespread. Therefore, we consider supply chain consisting of a manufacturer, an e-commerce platform, and an offline retailer, we study the impact of consumer web-rooming effect on the three sales modes of online channels, which are directly operated by the manufacturer, resold by the e-commerce platform, or co-exist with direct operation and resale, and comparatively analyze the pricing, demand, and profit of each channel under the three modes. The conditions for optimal pricing decisions are further explored through numerical simulation. It is found that profit always increases whether the online channel is opened by the manufacturer or the e-commerce company. The coexistence of direct sales and resale does not always increase profit for offline retailers, which must be discussed in the context of the sales model before channel expansion. The existence of web-rooming not only affects the decision-making of manufacturers and e-commerce platforms, but also always harms the interests of e-commerce platforms, and as the intensity of web-rooming deepens, the revenue of e-commerce platforms becomes smaller. Offline retailers benefit from web-rooming and experience a slowdown in profit growth as the intensity of the phenomenon increases. For manufacturers, the impact of changes in the intensity of the web-rooming is analyzed in relation to platform commission rates and online retail prices.