Online-offline fashion franchising supply chains without channel conflicts: Choices on postponement and contracts

Online-offline operations are known to induce channel conflicts if the same products are offered by them. Under many franchising arrangements in the fashion industry, to avoid channel conflicts and cannibalization between the franchisee and the brand owner, the brand owner will first supply the product for the franchisee to sell offline in the first period. After that, the brand owner will sell the product online directly in the second period. We explore this online-offline model with the focal points on the choice of franchising contract and the ordering time. By modelling the choices under four different scenarios, we derive the analytical conditions in which one scenario is preferred to another scenario with respect to contract type and ordering time option. We examine the problem from the perspectives of the brand owner, the franchisee and the supply chain. We identify the situations in which the optimal choices of the brand owner and the supply chain are the same, as well as the conditions when Pareto improvement is achievable.