Research On Channel And Service Selection Strategy Of DTC Enterprises Under Service Spillover Effect

In the early days,DTC(Direct-To-Consumer)companies paid a certain percentage of commission to online platforms and achieved the rapid rise of lowpriced and high-quality products from 0 to 1 and amazing sales by their consumerfacing business model and flat circulation structure.As online dividends gradually peaked,DTC companies entered the offline market.Since service quality is a key factor in improving customer satisfaction and expanding market share,DTC enterprises’ offline physical stores take into account the value of sales and experience,and stimulate consumers’ willingness to purchase through high experience and interactivity.In addition,high-experience services not only drive the demand of offline channels,but also bring diversion growth to online channels,that is,some consumers will transfer to online channels to complete actual purchases after experiencing products in offline physical stores,a phenomenon called service spillover effect.In this context,in the process of offline market expansion of DTC enterprises,choosing the appropriate offline channel structure and service operation mode is the core issue to be solved by enterprises.However,scholars usually conduct independent analysis of the two issues of channel construction and service operation,and the research on service operation mostly focuses on the selection of contractors under the same service cost.Based on this,this paper summarizes four typical channel service structures:(1)DTC enterprises open self-operated flagship stores and provide offline services(MM);(2)DTC enterprises open self-operated flagship stores and hire third-party service providers to provide offline services(M3P);(3)DTC enterprises settle in offline retail stores,retail stores provide offline services(EE);(4)DTC enterprises settle in offline retail stores,and retail stores hire third-party service providers to provide offline services(E3P).This paper introduces the service spillover mechanism,mathematically models the above channel service structure under the same service cost,and then examines the optimal decision-making of DTC enterprises,retailers and,third-party service providers in different channel service structures,and the strategic choice of channel service structure when DTC enterprises maximize profits.The results show that,(1)when the offline service costs of supply chain members are the same,the offline channels of DTC enterprises will not outsource services to third-party service providers,whether they open self-operated flagship stores or settle in retail stores.Specifically,if the service spillover effect is not significant,DTC enterprises will always take the MM model as the optimal strategy.If the service spillover effect is significant,the MM model is a balanced choice when the commission ratio is low,the EE model is optimal when the commission ratio is moderate,and the DTC enterprise withdraws from the EE model and chooses flagship store direct sales when the commission ratio exceeds the upper limit threshold.(2)When the offline service costs of supply chain members are different,MM,M3 P,EE,E3 P models may be the best channel service structure for DTC enterprises,and whether offline services are outsourced depends on whether the cost of third-party service providers has a dominant position,which is not only related to the offline service cost coefficient of each member of the supply chain,but also affected by the third-party service fee sensitivity coefficient.Specifically,under the influence of service spillover effect,if the cost advantage of the third-party service provider is significant,the M3 P model is optimal when the commission ratio is low,the E3 P model is optimal when the commission ratio is moderate,and the M3 P model is optimal when the commission ratio is high.If the third-party service provider only has a cost advantage over DTC enterprises,the M3 P model is optimal when the commission ratio is low,the EE model is optimal when the commission ratio is moderate,and the M3 P model is optimal when the commission ratio is high.If the third-party service provider does not have a cost advantage,the channel service selection of the DTC enterprise is consistent with the same cost as the supply chain member.