Mobile-App-Online-Website Dual Channel Strategies: Privacy Concerns, E-Payment Convenience, Channel Relationship, and Coordination

• Published in: IEEE transactions on systems, man, and cybernetics. Systems Vol. 51; no. 11; pp. 7008 - 7016
• Main Author: Choi, Tsan-Ming
• Format: Journal Article
• Language: English
• Published: New York IEEE 01.11.2021; The Institute of Electrical and Electronics Engineers, Inc. (IEEE)
• Subjects: Analytical models; Applications programs; Channel relationship; Channels; Contracts; coordination; Decision analysis; Mathematical analysis; Mathematical model; Mobile computing; mobile-app online dual channel; online payment; Pricing; Privacy; Risk; Risk aversion; supply chain; Supply chains; Websites
• ISSN: 2168-2216; 2168-2232
• DOI: 10.1109/TSMC.2019.2961979

Today, many mobile apps (MAs) act as an efficient channel for e-tailers to sell products. In addition to selling, some of these apps even include e-payment functions. This creates e-payment convenience but also a concern on privacy. In this article, we consider a supply chain with an e-tailer which sells through such an MA and an online website. The two channels influence the demand of one another. In the basic model, the e-tailer decides the promotion efforts in both channels. We interestingly find that the optimal promotion efforts are independent of e-payment convenience and privacy concern. We analytically establish that profit-sharing contract and two-part-tariff contract can coordinate the dual channel supply chain system but not revenue-sharing contract or sales rebate contract. In the extended models, we first consider the case when the e-tailer makes product pricing as well as promotion efforts decisions together. We analytically derive the optimal solution and find that the optimal pricing and promotion efforts depend on e-payment convenience and privacy concern. We further extend the analyses to the case when the e-tailer is risk averse and uncover that: 1) when the retail selling price is exogenously given, the optimal promotion efforts between the risk-neutral and risk-averse e-tailers are the same and 2) when the retail selling price is endogenous, the corresponding optimal retail selling prices and promotion efforts between the risk-neutral and risk-averse e-tailers are different. In particular, a higher degree of risk aversion will lead to higher (lower) promotion efforts and a higher (lower) retail selling price if demand volatility is sufficiently large (small).