Impact of Web-Based e-Commerce on Channel Strategy
The existing literature and industry trends suggest that web-based channels are fast becoming an integral part of the traditionally offline retailers' overall channel strategy. This paper takes a game theoretic approach to study the impact of web-based e-commerce on the choice of distribution channel strategy by the retailers. The current practice by most firms is to adopt a multi-channel strategy, which includes both web-based channels and preexisting offline channels. Our analysis validates this trend by identifying it as one of the equilibriums of the game, resulting from the competitive pressure induces by the other retailers. However, a more interesting outcome from our analysis is that there are other possible outcomes. The other possible outcomes include one where some sellers adopt a coordinated dual channel (i.e., both online and offline) strategy while the others continue selling through traditional offline channels, and another one where all the sellers switch to online channels. The latter outcome is unlikely to occur for industries where traditionally offline sellers have invested heavily in distribution-specific assets. However, it does provide an explanation for new web-based sellers' reluctance to include offline channels in their overall channel strategy.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Erik Brynjolfsson & Michael D. Smith, 2000.
"Frictionless Commerce? A Comparison of Internet and Conventional Retailers,"
INFORMS, vol. 46(4), pages 563-585, April.
- Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
- Minakshi Trivedi, 1998. "Distribution Channels: An Extension of Exclusive Retailership," Management Science, INFORMS, vol. 44(7), pages 896-909, July.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Rajiv Lal & Miklos Sarvary, 1999. "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, INFORMS, vol. 18(4), pages 485-503.
- Lumpkin, James R. & Hawes, Jon M. & Darden, William R., 1986. "Shopping patterns of the rural consumer: Exploring the relationship between shopping orientations and outshopping," Journal of Business Research, Elsevier, vol. 14(1), pages 63-81, February.
- Vicki G. Morwitz & David C. Schmittlein, 1998. "Testing New Direct Marketing Offerings: The Interplay of Management Judgment and Statistical Models," Management Science, INFORMS, vol. 44(5), pages 610-628, May.
When requesting a correction, please mention this item's handle: RePEc:ecl:illbus:02-0123. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.