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Chinese Journal of Management Science ›› 2019, Vol. 27 ›› Issue (12): 88-99.doi: 10.16381/j.cnki.issn1003-207x.2019.12.009

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Impact of “Showrooms” on Demand Allocation, Pricing and Profit in Omni-channel Retailing

LIU Jin-rong, XU Qi   

  1. Glorious Sun School of Business and Management, Donghua University, Shanghai 200051, China
  • Received:2017-12-05 Revised:2018-06-11 Online:2019-12-20 Published:2019-12-30

Abstract: In recent years, Showrooms, as a new experience business mode, has the advantages of improving the experience effect and reducing the return rate, and has an important impact on the profit of the retailer. In this study, profit models of the retailer before and after setting up Showrooms under the single Online channel and "Online + Store" channel are established on the basis of consumer utility in various channels, and then the impact of Showrooms on pricing, market demand, profit and online return rate with the cases of fixed price and optimal price are analyzed. The results show that:(1) Under single online channel, opening of Showrooms can increase the retailer's total market demand, and increase the total profit under the condition of the showrooms' operation cost is low when we fix the online price; while setting up showrooms can increase the retailer's online price and total demand and total profit under the condition of the showrooms' operation cost is low when we optimize the online price, but the total profit increase more under the pricing strategy of fixed price. (2) Under "Store + Online" dual channel, opening of Showrooms can increase the retailer's total demand and total profit under the condition of the Showrooms' operation cost is low and the online channel's return rate and shopping inconvenient cost is high, and the increase is greatest under the strategy of optimizing the online price only, followed by the strategy of the fixed store price and online price. But when both channel prices are optimized or only store price is optimized, the increase in total profit is not significant. (3) In addition, the final trend of price optimization is the same price on the online and offline line, and "Online+Store+Showrooms" channels will become into "Showrooms+Online or Store" channel, which is a new retail mode is of online and offline interoperability. (4) Opening of Showrooms can reduce the total online return rate and return amount.

Key words: Omni-channel, Showroom + Online channel, utility function, return rate

CLC Number: