This paper addresses operation strategies of the physical showroom under e-commerce and studies joint decisions of the showroom service and pricing based on product quality. First, we propose an analytical model to capture the feature of consumer purchase behaviors and examine the three operation strategies: the cooperation operation (CO), the manufacturer operation (MO), and the e-retailer operation (RO). Then, the equilibriums in the above three strategies are obtained and analyzed based on product quality. Besides, we extend the model to the scenario of endogenous product quality. The results are as follows. First, in contrast to the conventional wisdom, we find that the optimal showroom service may decrease with product quality when the production cost coefficient is high. Second, both product quality and production cost should be considered before opening physical showrooms. When the production cost coefficient is low, the MO strategy and the RO strategy are better than the CO strategy, which means that the enterprise should open the physical showroom separately. However, when the production cost coefficient is high, the CO strategy provides the optimal showroom service and the enterprises should cooperate to balance costs and benefits. Moreover, when product quality is endogenous, our analysis reveals that the RO strategy may offer better product quality than the CO strategy when the production cost coefficient is moderate.
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DOI : 10.1051/ro/2021177
Keywords: Omnichannel, operation strategy, physical showroom, product quality
@article{RO_2021__55_6_3797_0,
author = {Guo, Chunxiang and Tan, Yuyang and Tan, Yue},
title = {How to operate physical showrooms: {Service} decision and pricing based on product quality},
journal = {RAIRO. Operations Research},
pages = {3797--3816},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
number = {6},
doi = {10.1051/ro/2021177},
mrnumber = {4355428},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2021177/}
}
TY - JOUR AU - Guo, Chunxiang AU - Tan, Yuyang AU - Tan, Yue TI - How to operate physical showrooms: Service decision and pricing based on product quality JO - RAIRO. Operations Research PY - 2021 SP - 3797 EP - 3816 VL - 55 IS - 6 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2021177/ DO - 10.1051/ro/2021177 LA - en ID - RO_2021__55_6_3797_0 ER -
%0 Journal Article %A Guo, Chunxiang %A Tan, Yuyang %A Tan, Yue %T How to operate physical showrooms: Service decision and pricing based on product quality %J RAIRO. Operations Research %D 2021 %P 3797-3816 %V 55 %N 6 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2021177/ %R 10.1051/ro/2021177 %G en %F RO_2021__55_6_3797_0
Guo, Chunxiang; Tan, Yuyang; Tan, Yue. How to operate physical showrooms: Service decision and pricing based on product quality. RAIRO. Operations Research, Tome 55 (2021) no. 6, pp. 3797-3816. doi: 10.1051/ro/2021177
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