Joint Decisions of Channel Selection and Direct-Store-Delivery in a Supply Chain

This paper examines the effects of Direct-Store-Delivery (DSD) on the channel strategy of manufacturers by constructing a game-theoretic model. The equilibrium results show that whether in DSD or traditional arrangement, the optimal distribution channel of manufacturers is a dual channel, which can expand the distribution market. In addition, the dominance of single channels is related to the unit entry cost and the operational efficiency. Compared with the traditional arrangement, the adoption of DSD can promote offline channels superior to online channels. Finally, manufacturers always prefer to adopt DSD, and retailers prefer not to adopt it without any incentives. We design a supply chain incentive mechanism to eliminate the conflict, through which Pareto improvement can be carried out