Consumer Inter-Product Showrooming and Information Service Provision in an Omni-Channel Supply Chain
Operations Research and Operations Management
Tao Zhang; Gang Li and Stephen Shum
Decision Sciences Journal, October 2020
Professor Stephen Shum of the Department of Management Sciences and co-authors have developed a theoretical model to investigate consumer inter-product showrooming (inter-SR) behaviour and the information service provision in an omni-channel supply chain. Facilitated by physical showrooms, many online first retailers have embarked on the practice of omni-channel retailing. This offline to online mode (information delivery offline and product fulfillment online) empowers consumers’ showrooming behaviour in two ways, namely, intra-product showrooming (intra-SR) and inter-product showrooming (inter-SR). As the physical showroom usually displays a partial assortment of the online products, consumer inter-SR, i.e., the behaviour of inspecting one product offline but buying a different or related product online, is critical to firms’ decisions. Moreover, inter-SR facilitated by the retailer’s omni-channel operations changes the nature of upstream competition between manufacturers. Professor Shum and co-authors develop a theoretical model to investigate consumer inter-SR behaviour and the information service provision in an omni-channel supply chain. Their main findings are as follows. First, consumer inter-SR benefits the manufacturer whose product is displayed online exclusively but hurts the manufacturer whose product is dual-channel displayed; inter-SR is beneficial to the omni-channel retailer only when the inter-SR intensity is not too high. Second, under the service compensation contract, the dual-channel manufacturer and the retailer can be coordinated to provide enhanced information service; the online-exclusive manufacturer, however, may be either better off or worse off depending on the relative strengths of the utility-increasing effect and the service-differentiating effect of the information service enhancement. Third, the consumers located far from the showrooms are more likely to be hurt by the inter-SR behaviour and the information service compensation, while the local consumers generally benefit from them. Finally, the in-store inventory that facilitates immediate product fulfillment has a positive impact on the retailer’s information service provision.
