Manufacturer's Pricing Strategy for Mixed Retail and E-tail Channels

Abstract

With the increasing popularity of e-commerce, manufacturers are selling more of their products through the e-tail (online) distribution channel in additional to the traditional retail (offline) distribution channel. The central issue faced by a manufacturer with the mixed retail and e-tail channels is pricing strategy. In this paper, we investigate the pricing strategies of a manufacturer and a mix of retailers and e-tailers in a two-echelon supply chain with price and service level dependent demands. We compare different pricing options of the manufacturer to discuss its optimal pricing strategy. In addition, we analyse the effects of different manufacturer's pricing strategies on supply chain profit.