Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
Price competition between dual-channel and pure online retailers frequently occurs in reality, but the result is too complex to foresee. Pricing strategy and management advices are given in this paper to help enterprises solve problems of price competition. Focused on the price competition between a dual-channel retailer and a pure online retailer, and the uniform pricing strategy was adopted by the dual-channel retailer to avoid channel conflicts. A linear demand model which contained the substitution effect was adopted to characterize the competition between different channels and a non-cooperative game model was built to obtain the pricing equilibrium. Several specific scenarios were set to compare the pricing strategies of retailers. From the findings it can be concluded that whether the dual-channel retailer has an advantage over the pure online retailer in competition depends on the relative size of online market to the traditional channel market and the dual-channel retailer?s main sales channel should be gradually shifted from the offline to online, and the traditional channel will be a complementary channel of online channel to improve the user experience. When the dual-channel retailer has no obvious advantage on market size, the pure online retailer will benefit more from price competition.

Keywords: dual-channel retailer; pure online retailer; uniform pricing; price competition.

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