Analysis of delivery strategies for dual-channel retail in China’s home furnishing industry

Owing to the unique characteristics of home furnishing products, dual-channel delivery constitutes a crucial part of the consumer experience, prompting domestic home furnishing retailers in China to regard delivery as a key strategic priority. According to the different service providers and usage channels of logistics, home furnishing retailers can adopt multiple delivery strategies. Specifically, we explore three alternative delivery modes: outsourcing the online order delivery to a third-party logistics (3PL) provider but not providing the offline delivery service (Mode B); outsourcing both online and offline delivery services to a 3PL provider (Mode O); and organizing a self-built logistics system for the delivery of both online and offline orders (Mode S). Constructing a game-theoretic model involving a dual-channel home furnishing retailer and a 3PL provider, this paper explores the optimal pricing strategies and delivery modes under different conditions. The results reveal that the retailer can strategically abandon the online market by adjusting pricing or logistics service decisions under certain circumstances. By comparing the equilibrium results of different modes, we find that although improving the delivery service levels is a current trend in the home furnishing industry, such service improvement paired with higher retail prices does not always yield benefits for the retailer. Even consumers do not always prefer a high-level delivery service. The best delivery mode depends on the dual impact of consumers’ perceptions of online and offline shopping experiences, as well as logistics costs. Furthermore, supply chain members’ preferences for delivery modes are mostly contradictory. Only when the cost of self-built logistics is high and customers heavily rely on the offline delivery service can a multi-win outcome be achieved.