Research Of Channel Conflict And Channel Coordination In E-commerce

The development of Internet has greatly narrowed the distance between manufacturers and customers. Many manufacturers open up direct Internet channel while keeping the traditional ones. However, the manufacturers must properly deal with the channel conflicts otherwise maybe the benefits of both themselves and the retailers will be ruined. Therefore, the coordination of dual channels is important to the success of the supply chain.In this paper, firstly we study several channel structure. Later, we analyze some management strategies to coordinate the channel conflicts, including product strategy, price strategy, promote strategy and channel strategy. Our study focuses on the price strategy. We analyze a scenario where a manufacturer with a traditional retailer opens up a direct Internet channel that is in competition with the retailer. We assume that in order to mitigate channel conflict the manufacturer commits to setting a direct channel retail price that matches the retailer's price in the traditional channel. Then we determine the effect of more specific pricing strategies on prices and profits of the manufacturer and the retailer. These specific strategies are: 1) keep wholesale prices as they were before, 2) keep retail prices as they were before, and 3) select wholesale and retail prices that optimize profits for the manufacturer. We find that Strategy 3 - the specific equal-pricing strategy that optimizes profits for the manufacturer - often is also preferred by the retailer and customers (through lower prices) over the other strategies and also can partly coordinate the supply chain.