The Impact of Offline Service Effort Strategy on Sales Mode Selection in an E-Commerce Supply Chain with Showrooming Effect

Abstract

In practice, several e-commerce platforms offering online channels not only act as resellers but also serve as the marketplace. However, the existing literature rarely explores the impact of the offline service effort strategy with the showrooming effect on the platform’s optimal sales mode. Considering a supply chain consisting of a manufacturer and a platform, we examine the interplay between the manufacturer’s offline service effort strategy and the platform’s online sales modes. We derive conditions under which each of the four scenarios (adopting the service effort strategy under the agency or reselling modes, not adopting the service effort strategy under the agency or reselling modes) emerges in equilibrium. Our results show that the service effort strategy with the showrooming effect can induce the platform’s sales mode selection. Specifically, when the referral fee is low and the showrooming effect is moderate, the platform may choose the agency mode instead of the reselling mode, while when the referral fee is sufficiently high and the showrooming effect is moderate, the platform may adopt the reselling mode instead of the agency mode. Furthermore, when the competition intensity and showrooming effect are sufficiently small, the service effort strategy will be beneficial to the manufacturer and the platform, creating a win-win situation. When the competition intensity or showrooming effect is sufficiently large, the service effort strategy may cause a prisoner’s dilemma for the manufacturer and the platform. In addition, the supply chain consisting of a manufacturer, an offline store and an online platform is also studied in the extension section, and we find that our main results are valid.

Keywords

• service effort strategy
• showrooming effect
• sales mode selection
• game theory
• supply chain management