Decision and Coordination of an O2O Supply Chain With Market Segmentation and Showrooming Effect

Abstract

This paper investigates impacts of market segmentation and showrooming effect on the decision-making of an O2O supply chain, and puts forwards a contract to coordinate the O2O supply chain. Results show that, the showrooming effect is beneficial to the manufacturer, retailer and the supply chain, and the retailer will offer offline showrooming service. Under the influence of market segmentation, O2O supply chain is not necessarily better than single-channel supply chain structure. But adopting advertising and other means to improve consumers’ online channel acceptance, it can realize transformation from single-channel to O2O structure. The benefits of showrooming effect can eliminate the disadvantage of market segmentation. Moreover, a service cost sharing contract is put forward, which can perfectly coordinate the O2O supply chain with market segmentation and showrooming effect. These findings help managers to understand which channel structure is optimal by considering market segmentation and showrooming effect and identify possible pathways for them to perfectly cooperation.

Who Should Open Offline Showrooms?

“…Furthermore, some quantitative studies focus on the influence of showrooming on supply chain members' decisions. The popular arguments usually show the threat of showrooming for traditional retailers but not e-tailers or both of them (Rapp et al 2015;Jing 2017;Basu et al 2017;Qi et al 2022). For example, Balakrishnan et al (2014) indicate showrooming is when a shopper visits an offline store to check out a product but then purchases the product at an e-tailer, which is more representative research.…”