Purpose

This paper aims to theoretically investigate an online company’s optimal decision on its offline expansion strategy. In the past five years, many large online retailers and internet-based companies such as Amazon, Google, Alibaba, Tencent and JD.com have expanded their offline market but it was observed that they adopted different expansion strategies. Specifically, some of them expand the offline market by acquiring offline retailers, while some do so by purchasing a portion of offline retailer’s stake. This difference leads to a quite different structure in post-expansion market, having an impact on profit, consumer surplus and social welfare. The goal of this paper is to model such expansion strategies in a general way and complete studies on profits and welfare.

Design/methodology/approach

By constructing a Salop model with two offline retailers and one online company, this paper analyzes the case where the online company can expand its offline market by either acquiring or jointing (e.g. stakeholding) with one offline retailer. The former strategy (named Strategy A) allows the online company to fully control and capture residual claims of the offline retailer. With the adoption of the latter strategy (named Strategy C), on the other hand, the online company can obtain a fixed proportion of its offline partner’s quasi rent. In the price competition, the online company chooses its optimal offline expansion strategy by predicting its profit in the post-expansion market.

Findings

This paper found that the equilibrium crucially depends on the synergy effect due to online–offline integration, and such synergy also influences both consumer and social welfare. This study shows the various conditions on the synergy that affect an online company moves toward offline markets. Accordingly, this finding can assist online companies with or without retailing business to choose an optimal strategy when expanding offline markets. Moreover, by doing some necessary welfare analysis, this study shows that the online company’s offline expansion is not always benefiting consumers nor be socially desirable, which may shed some lights on the possible competition policy in the case where online companies practice in offline expansion.

Originality/value

Different from conventional wisdom in online-offline integration, the theory indicates that the offline expectation of online company may not always benefit consumers nor be socially desirable. Moreover, the findings also shed some lights on the possible competition policy in the case where online companies practice in offline expansion.

中文翻译：

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线上企业线下扩张策略建模

目的

本文旨在从理论上研究在线公司对其线下扩张策略的最优决策。过去五年，亚马逊、谷歌、阿里巴巴、腾讯、京东等多家大型线上零售商和互联网公司都在拓展线下市场，但观察到他们采取了不同的扩张策略。具体来说，有的通过收购线下零售商来扩大线下市场，有的则通过收购线下零售商的部分股权来扩张线下市场。这种差异导致后扩张市场的结构截然不同，对利润、消费者剩余和社会福利产生影响。本文的目标是以一般方式对此类扩张策略进行建模，并完成对利润和福利的研究。

设计/方法/方法

本文通过构建具有两家线下零售商和一家在线公司的Salop模型，分析了在线公司可以通过收购或与一家线下零售商联合（例如入股）来扩大其线下市场的情况。前一种策略（称为策略 A）允许在线公司完全控制和获取线下零售商的剩余索取权。另一方面，采用后一种策略（称为策略C），在线公司可以获得其线下合作伙伴的准租金的固定比例。在价格竞争中，在线公司通过预测其在扩张后市场的利润来选择其最优的线下扩张策略。

发现

本文发现，平衡关键取决于线上线下整合的协同效应，这种协同效应也影响消费者和社会福利。这项研究显示了影响在线公司向线下市场转移的协同作用的各种条件。因此，这一发现可以帮助有或没有零售业务的在线公司在扩展线下市场时选择最佳策略。此外，通过进行一些必要的福利分析，本研究表明，在线公司的线下扩张并不总是使消费者受益，也不符合社会期望，这可能为在线公司进行线下扩张的情况下可能出现的竞争政策提供一些启示。

原创性/价值

与线上线下整合的传统智慧不同，该理论表明，在线公司的线下期望可能并不总是有益于消费者，也可能不符合社会需求。此外，调查结果还揭示了在线公司进行线下扩张的情况下可能的竞争政策。