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

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).