Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior

Yongma Moon, Tao Yao

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Citation (Scopus)

Abstract

One challenging question E-business executives face is whether to construct the direct Internet channel in addition to the traditional retail channel. In this paper, we develop a model for strategic dual channel investment under uncertainty and strategic customer behaviors. Based on this model, we provide analytical solutions for thresholds that dual channel makes less profit than a single channel. Moreover, we studied the role of a cost structure for the Internet channel based on this threshold. Companies are likely to have wider inefficiency region as the cost for the Internet channel increases. We provide numerical examples to analyze the effects of price volatility, uncertainty, on the inefficiency of dual channel and the effects of an asymmetric cost structure.

Original languageEnglish (US)
Title of host publication2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI
DOIs
StatePublished - Dec 1 2007
Event2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI - Philadelphia, PA, United States
Duration: Aug 27 2007Aug 29 2007

Publication series

Name2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI

Other

Other2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI
CountryUnited States
CityPhiladelphia, PA
Period8/27/078/29/07

Fingerprint

Internet
Costs
Industry
Profitability
Electronic business
Dual-channel
Cost structure
World Wide Web
Customer behavior
Inefficiency
Uncertainty
Investment under uncertainty
Analytical solution
Profit
Price volatility
Retail

All Science Journal Classification (ASJC) codes

  • Information Systems
  • Management Science and Operations Research

Cite this

Moon, Y., & Yao, T. (2007). Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior. In 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI [4383868] (2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI). https://doi.org/10.1109/SOLI.2007.4383868
Moon, Yongma ; Yao, Tao. / Inefficiency of dual channel in E-business : Asymmetric cost structure and customer behavior. 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI. 2007. (2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI).
@inproceedings{c810f2c8073b4a3398f1426facaaf7a4,
title = "Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior",
abstract = "One challenging question E-business executives face is whether to construct the direct Internet channel in addition to the traditional retail channel. In this paper, we develop a model for strategic dual channel investment under uncertainty and strategic customer behaviors. Based on this model, we provide analytical solutions for thresholds that dual channel makes less profit than a single channel. Moreover, we studied the role of a cost structure for the Internet channel based on this threshold. Companies are likely to have wider inefficiency region as the cost for the Internet channel increases. We provide numerical examples to analyze the effects of price volatility, uncertainty, on the inefficiency of dual channel and the effects of an asymmetric cost structure.",
author = "Yongma Moon and Tao Yao",
year = "2007",
month = "12",
day = "1",
doi = "10.1109/SOLI.2007.4383868",
language = "English (US)",
isbn = "1424411181",
series = "2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI",
booktitle = "2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI",

}

Moon, Y & Yao, T 2007, Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior. in 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI., 4383868, 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI, 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI, Philadelphia, PA, United States, 8/27/07. https://doi.org/10.1109/SOLI.2007.4383868

Inefficiency of dual channel in E-business : Asymmetric cost structure and customer behavior. / Moon, Yongma; Yao, Tao.

2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI. 2007. 4383868 (2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI).

Research output: Chapter in Book/Report/Conference proceedingConference contribution

TY - GEN

T1 - Inefficiency of dual channel in E-business

T2 - Asymmetric cost structure and customer behavior

AU - Moon, Yongma

AU - Yao, Tao

PY - 2007/12/1

Y1 - 2007/12/1

N2 - One challenging question E-business executives face is whether to construct the direct Internet channel in addition to the traditional retail channel. In this paper, we develop a model for strategic dual channel investment under uncertainty and strategic customer behaviors. Based on this model, we provide analytical solutions for thresholds that dual channel makes less profit than a single channel. Moreover, we studied the role of a cost structure for the Internet channel based on this threshold. Companies are likely to have wider inefficiency region as the cost for the Internet channel increases. We provide numerical examples to analyze the effects of price volatility, uncertainty, on the inefficiency of dual channel and the effects of an asymmetric cost structure.

AB - One challenging question E-business executives face is whether to construct the direct Internet channel in addition to the traditional retail channel. In this paper, we develop a model for strategic dual channel investment under uncertainty and strategic customer behaviors. Based on this model, we provide analytical solutions for thresholds that dual channel makes less profit than a single channel. Moreover, we studied the role of a cost structure for the Internet channel based on this threshold. Companies are likely to have wider inefficiency region as the cost for the Internet channel increases. We provide numerical examples to analyze the effects of price volatility, uncertainty, on the inefficiency of dual channel and the effects of an asymmetric cost structure.

UR - http://www.scopus.com/inward/record.url?scp=52049095057&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=52049095057&partnerID=8YFLogxK

U2 - 10.1109/SOLI.2007.4383868

DO - 10.1109/SOLI.2007.4383868

M3 - Conference contribution

AN - SCOPUS:52049095057

SN - 1424411181

SN - 9781424411184

T3 - 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI

BT - 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI

ER -

Moon Y, Yao T. Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior. In 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI. 2007. 4383868. (2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI). https://doi.org/10.1109/SOLI.2007.4383868