The Overlooked Benefit of Consumer Showrooming for a Physical Retailer
One common view about consumers’ ability to do showrooming is that it hurts a physical retailer’s profit because it drives demand from the physical retailer to other e-retailers. Our study shows that such a view holds true when the supplier does not respond to consumers’ ability to do showrooming by updating the wholesale price for the physical retailer. If she does, she may either reduce or raise the wholesale price, of which the latter choice may exploit the physical retailer’s deterrence of showrooming. Interestingly, although consumer showrooming itself drives demand away from the physical retailer, it prevents the supplier from charging a higher wholesale price to drive demand away from the physical retailer when the supplier becomes more cost-efficient in salvaging returned products. Such supply-side benefit of consumer showrooming for the physical retailer – the salvage-loss-blocking effect – might eventually lead the physical retailer to be better off with consumer showrooming. Our study also identifies an adverse supply-side effect of consumer showrooming – the offline-improvement-exploitation effect – which hinders the physical retailer’s strategic incentive to reduce consumers’ offline shopping cost. It indicates that the supplier will capture all the benefit of reducing consumers’ offline shopping cost once the cost drops below a threshold. We show that the physical retailer can regain his benefit from reducing consumers’ offline shopping cost by replacing the wholesale contract with the agency contract – an example of mitigating the adverse effect of consumer showrooming by altering the supply chain contract
Year of publication: |
2019
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Authors: | Hao, Lin ; Kumar, Subodha |
Publisher: |
[S.l.] : SSRN |
Description of contents: | Abstract [papers.ssrn.com] |
Saved in:
Extent: | 1 Online-Ressource |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 21, 2019 erstellt Volltext nicht verfügbar |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014107689
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