A Strategic analysis of a dual-channel Retailer with price, inconvenience and delivery lead time considerations

In this paper, we study the optimal strategies for a dual-channel retailer, who sells a product through both a traditional channel and an online channel. We investigate how the changes of the degree of customer acceptance of the online channel and the traditional channel inconvenience affect the strategies of the two channels under two different scenarios: Nash competition and channel integration. We get that whether the price or profit of the traditional channel is higher than the online channel mainly depends on the traditional channel inconvenience under the two different scenarios. The dual-channel retailer's profit is always greater in the optimal channel-integration scenario than in Nash competition scenario. From the numerical analysis, we can get that the retailer's total profit is first decrease with the lead time sensitivity parameter then increase with it, which means the retailer can set a relative small or large lead time to get more profit.