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A strategic analysis of timing of wholesale pricing and information sharing strategy in dual-channel retailing

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Abstract

To investigate the value of information sharing in dual-channel retailing, we construct a supply chain consisting of one manufacturer and one retailer engaged in a Stackelberg game. In contrast to prior research, we study the interplay between each player’s channel and information sharing strategies by examining boundary cases. Furthermore, we study two alternative timings for the manufacturer to set the wholesale price: after information sharing (mode AD) or before information sharing (mode BD). Our results show that the market conditions and timing to set wholesale prices can affect each player’s channel strategy. Under specific circumstances, both the manufacturer and retailer may opt to strategically abandon their channels to maximize profits. Moreover, we find that in mode AD, information sharing consistently benefits the manufacturer and supply chain, while it may negatively impact the retailer. In mode BD, information sharing benefits the manufacturer while may hurt the retailer and supply chain due to boundary cases. Therefore, information sharing agreement can be reached in most cases under modes AD and BD. However, it is noteworthy that with a medium demand variance and low channel substitution rate, information sharing may not be reached under mode BD. Finally, we compare mode AD and BD and discover that in interior equilibrium cases, the manufacturer always favors mode AD while the retailer and supply chain prefer mode BD. However, preferences may alter when considering the boundary cases: in most cases, the supply chain and retailer prefer mode AD.

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Notes

  1. https://www.digitalcommerce360.com/2002/06/25/gnx-launches-cpfr-program-with-german-retail-giant-metro/,

    https://www.gs1.org/sites/gs1/files/case_study_library_item/gs1_verified_case_study_metro.pdf

  2. https://www.theverge.com/2020/6/26/21297400/microsoft-retail-stores-closing-cities-open

  3. https://www.grandvinwinemerchants.co.uk/en-primeur/about-en-primeur

  4. https://www.reuters.com/article/us-h-m-italy-shops-idUSKCN22A2O6

  5. https://www.beardbrand.com/blogs/urbanbeardsman/beardbrand-is-now-on-amazon

  6. https://insideretail.asia/2022/07/28/maybelline-to-shut-stores-in-china/

  7. https://www.gorgias.com/blog/beardbrand

  8. https://www.beardbrand.com/blogs/urbanbeardsman/beardbrand-is-now-on-amazon

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Funding

This study was funded by Natural Science Foundation of China [72271234] and Bei**g Natural Science Foundation Municipality [9212010].

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  1. School of Business, Renmin University of China, Bei**g, 100872, People’s Republic of China

    Jianghua Wu, Yuan Xue & Jiahao Yu

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  1. Jianghua Wu
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  2. Yuan Xue
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Correspondence to Jiahao Yu.

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Wu, J., Xue, Y. & Yu, J. A strategic analysis of timing of wholesale pricing and information sharing strategy in dual-channel retailing. Ann Oper Res (2024). https://doi.org/10.1007/s10479-024-06080-8

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