The blockchain adoption strategies of online retailer in a dual-channel supply chain

Abstract

Blockchain technology has emerged as a promising solution to address consumer distrust caused by the lack of transparency in online channels, thereby promoting the further growth of these channels. In this study, we focus on a dual-channel supply chain comprising a supplier, an online retailer, and an offline retailer, and offering two categories of products, convenience preference product (CPP) and trust preference product (TPP), based on consumers’ purchasing preference. Specifically, we consider three different blockchain adoption models: the online-retailer-based model (Model EB), the supplier-based model offering to solely the online retailer (Model SB), and the supplier-based model offering to both online and offline retailers (Model SA). We show that the online retailer always benefits from adopting blockchain for the CPP. However, for the TPP, only the cost coefficient of traceability by blockchain is low, and a Pareto improvement of blockchain adoption for all the players can be found under certain conditions. We also show that the online retailer benefits from Model SB when the cost coefficient is high, and from Model SA when the competition intensity is low (or high) and the cost coefficient is high (or small-medium). Furthermore, we compare the different blockchain adoption models’ impact on the players’ performance in pairs and inspect the online retailer’s optimal blockchain adoption strategy. Through extended study, we find that blockchain adoption for the TPP consistently leads to an increase in social welfare. However, for the CPP, social welfare only improves when both the competition intensity and the cost coefficient are low.