<scp>A Model of Direct and Intermediated Sales</scp>

Hendershott, Terrence; Zhang, Jie

doi:10.1111/j.1530-9134.2006.00101.x

Cited by 87 publications

(40 citation statements)

References 31 publications

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“…These include Rhee and Park (2000), Hendershott and Zhang (2001), Rhee (2001), Chiang, Chhajed, and Hess (2002), and Peleg and Lee (2002), in which customers have an option for direct delivery from the manufacturer, and Boyaci (2001), Bell, Wang, and Padmanabhan (2002), and Ahn, Duenyas, and Zhang (2002), in which customers can shop in physical stores owned by the manufacturer. One distinction of our model is that it is sufficiently general to consider the logistics and marketing cost signatures of either type of manufacturer-controlled channel, which can differ dramatically.…”

Section: Literature Reviewmentioning

confidence: 99%

Channel Conflict and Coordination in the E‐Commerce Age

Tsay

Agrawal

2004

Production and Operations Management

890

486

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A number of factors, including developments in Internet-based commerce and third-party logistics, have led many companies to consider engaging in direct sales. Such a company may at once be both a supplier to and a direct competitor of any existing reseller partners (e.g., land-based retailers), which can result in "channel conflict." This can have momentous implications for distribution strategy.To generate managerial insights into this important issue, we develop a model that captures key attributes of such a setting, including various sources of inefficiency. We examine these in detail and identify a number of counterintuitive structural properties. For instance, the addition of a direct channel alongside a reseller channel is not necessarily detrimental to the reseller, given the associated adjustment in the manufacturer's pricing. In fact, both parties can benefit.Finally, we examine ways to adjust the manufacturer-reseller relationship that have been observed in industry. These include changes in wholesale pricing, paying the reseller a commission for diverting customers toward the direct channel, or conceding the demand fulfillment function entirely to the reseller. The latter two schemes could be mutually beneficial in that they achieve a division of labor according to each channel's competitive advantage.

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Section: Literature Reviewmentioning

confidence: 99%

Channel Conflict and Coordination in the E‐Commerce Age

Tsay

Agrawal

2004

Production and Operations Management

890

486

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“…After selling the good, all sellers produce another 21 The results presented here go through even when middlemen store the goods for more than one period. 22 Spulber (1996) and Rust and Hall (2003) assume that aggregate demand by buyers and aggregate supply by sellers are assumed to be balanced each period.…”

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confidence: 84%

“…Suppose now that middlemen have the technology to store the goods for one period as an inventory. 21 Then, in order to hold I units at the beginning of each day, middlemen need to purchase I units each night. Hence, there is a measure M I of aggregate demand at every night market.…”

Section: Steady-state Inventory Restockingmentioning

confidence: 99%

Middlemen: The Visible Market Makers

Watanabe

2006

SSRN Journal

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This paper presents a search-theoretic model where middlemen can emerge endogenously to intermediate between ex ante homogeneous buyers and sellers in the presence of coordination frictions. Middlemen set price to compete in the market, and hold an inventory to provide a high matching service. I show that middlemen's inventories can mitigate trade imbalances and interact with price competition, generating an interesting tradeoff for the equilibrium price determination.The competitive limit emerges when middlemen guarantee excess demand will never occur.Conditions are characterized under which middlemen carry out the short-side principle for the market price to be Walrasian. JEL Classification: D4, D5, D6, D8, G2, L1

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“…Most of the studies focus on competition on inventory [14,15], price [16,17], both inventory and price [18,19], and joint price and lead time [20]. There are other related studies considering the impact of sales effort [9], impact of search costs [21], etc. In a recent work, Dong et al [22] studied sustainability investment under cap-and-trade regulation.…”

Section: Literature Reviewmentioning

confidence: 99%

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

2016

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Abstract:Supply chain sustainability has become significantly important in the fashion industry, and more and more fashion brands have invested in developing sustainable supply chains. We note that dual channel system comprising a brand-owned direct channel and retail outsourcing channel is quite common in the fashion industry, and in the latter, buy-back contract is popular between brands and retailers. Therefore, we build a stylized dual channel model with price competition and demand uncertainty to characterize the main properties of a fashion supply chain. Our foci are the sustainability analysis and the channel coordination mechanism. We first design a buy-back contract with return cost to coordinate the channel. We then study supply chain sustainability and examine the effect of two key influencing factors, i.e., price competition and demand uncertainty. Interestingly, we find that a fiercer price competition will lead to a more sustainable supply chain. From the perspective of supply chain managers, we conclude that (1) if managers care about environmental sustainability, fierce price competition is not a suggested strategy; (2) if managers care about economic sustainability, fierce price competition is an advantageous strategy. We also find that high demand uncertainty results in a less sustainable supply chain, in both an environmental and economic sustainability sense.

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A Model of Direct and Intermediated Sales

Cited by 87 publications

References 31 publications

Channel Conflict and Coordination in the E‐Commerce Age

Channel Conflict and Coordination in the E‐Commerce Age

Middlemen: The Visible Market Makers

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

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