Theoretical And Empirical Analysis On The Price Competition Of China’s B2C Online Retail Market

As a part of electronic commerce,B2C Internet retailing is flourishing with the rapid development of electronic commerce.Due to there is a certain of substitution effect between Internet retailers and bricks-and-mortar stores, the rapid development of B2C internet retailing has a marked impact on the bricks-and-mortar stores. The competition between these two kinds of retailers is becoming more and more fierce. In order to cope with competition,bricks-and-mortar stores open their Internet stores.Increasingly,many bricks-and-mortar stores are having online presence and turning themselves into bricks-and-clicks retailers(retailers with bricks-and-mortal stores who also have an Internet store). This kind of retailers compete with pure play Internet retailers in price.Pricing difference between these two kinds of retailers are important from both theoretical and empirical perspective and have implications for retailers pricing strategies.In view of these situation, the paper studies on the price competition between these two kinds of retailers from both theoretical and empirical aspects.Firstly,analyze the price competition between two enterprises with non-cooperative game.Draw a conclusion that two enterprises will choose to lower their prices as early and many as possible in order to achieve more market shares.As a result,they fall into the "prisoner’s dilemma"so that the benefits of two sides are minimized; Secondly,use a Two-stage game model to analyze the competition. First stage,from the perspective of consumer utility maximization, analysis the distribution of consumers on the online retail market.Second stage,from the perspective of enterprise profit maximization,analysis the price competition of this two types of retailers.Finally come to the conclusion that the unit cost of the product and the cost of other than the price which consumers need to pay will affect the relationship of the two kinds of online retailer’s optimal pricing. And no matter how the consumer’s distribution among the two kinds of online retailers, their optimal price is positively related to the unit cost of their own and competitors’products.Lastly,select the mobile phone market as the sample of market to do the empirical analysis.I selected 39 mobile phone from eight major online retailers and collected thousands of sales price data as the empirical data.I test the price level and price dispersion degree of mobile phone between pure Internet retailers and dual-channel online retailer through a variety of statistical analysis of these data. The empirical results show that different test methods will get different results.There was a significant price difference in the same mobile phone that both kinds of retailers sell.And dual-channel internet retailers have higher price level. However,I got a different result with the Wilcoxon signed rank test.The results of this kind of test showed that both the price level does not have significant differences. The degree of price dispersion is related with some other factors such as if the phone is sold well and the price level of the phone itself is high or low.These results is not exactly the same as the former scholar’s research conclusion.At the end of this paper, under the precondition of grasping the China’s online retail market development status and current situation of price competition and on the basis of the theoretical and empirical analysis, I put forward some proposals about how the online retailers participate in market competition and how the government promote healthy development of the online retail market.At last, under the precondition of grasping the development situation and price competition of the online retail market,I puts forward some suggestions on how the online retailers actively participate in market competition.