The dark side of bilateral encroachment within a supply chain

Nie, Jiajia; Wang, Qijun; Chun-lai, Shi; Zhou, Yu

doi:10.1080/01605682.2021.1880293

Cited by 11 publications

(5 citation statements)

References 41 publications

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“…They find that when the store brand product's quality is relatively low, it is the best for the manufacturer to establish a direct channel and the retailer to introduce store brand. Nie et al (2022) also study the interaction of manufacturer encroachment and the retailer's store brand introduction. Their results reveal that bilateral encroachment may result in a prisoner's dilemma.…”

Section: Studies On Manufacturer Encroachmentmentioning

confidence: 99%

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Manufacturer encroachment and quality investment decisions in a two‐period supply chain

Wang

et al. 2023

Int Trans Operational Res

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With the development of Internet technology, many manufacturers encroach into the retail market by selling products directly to consumers, which is called manufacturer encroachment. In practice, the manufacturer may encroach in normal sales period, markdown period, or both periods in a two‐period supply chain. It is a challenging task for the firm manager to provide appropriate quality level under different channel structures. This research originally studies manufacturer encroachment with endogenous quality investment decision in a two‐period supply chain considering that consumers' valuation of products depreciates over time. Using a game‐theoretic framework, this work explores four channel strategies of the manufacturer and discusses equilibrium decisions and profits. The analysis generates several insights. First, the manufacturer should promote quality investment if encroachment occurs when the direct selling is efficient. Second, regardless of which period and scenario, encroachment may increase wholesale price when the direct selling cost is smaller than a threshold. Third, results show the effect of encroachment time on price could be classified into quality investment effect, wholesale price effect, and channel‐adding effect. The quality investment effect increases retail price, while the channel‐adding effect and wholesale price effect decrease retail price. Finally, results reveal that encroachment is always the best choice for the manufacturer and it does not always harm the retailer's profits. Overall, our results and managerial insights can help the manufacturer to formulate channel strategies, wholesale price, and selling quantity decisions while help the retailer to make order quantity decision.

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Section: Studies On Manufacturer Encroachmentmentioning

confidence: 99%

“…Nie et al. (2022) also study the interaction of manufacturer encroachment and the retailer's store brand introduction. Their results reveal that bilateral encroachment may result in a prisoner's dilemma.…”

Section: Literature Reviewmentioning

confidence: 99%

Manufacturer encroachment and quality investment decisions in a two‐period supply chain

Wang

et al. 2023

Int Trans Operational Res

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“…In particular, the rapid growth of e‐commerce has prompted many manufacturer firms to choose to redesign their distribution channels to carve out potential market share (Tahirov & Glock, 2022). There are differences in the focus of research on manufacturer invasion, with some studies focusing on commodity brand effects, for example, manufacturer encroachment strategies under retailer store brands and national brands (Balasubramanian & Maruthasalam, 2021; Nie et al, 2021; Zhang, Liu, et al, 2021; Zhang, Song, et al, 2021) and private brand encroachment strategies (Li, Cai, & Chen, 2021; Li, Hu, et al, 2021; Li, Liang, et al, 2021). Manufacturer encroachment under advertising and marketing strategies (Huang et al, 2021; Ma & Hong, 2021; Zhang et al, 2019), green products and green investments (Li, Cai, & Chen, 2021; Li, Gong, et al, 2022; Li, Hu, et al, 2021; Li, Zhang, et al, 2022), manufacturer encroachment under information sharing (Huang, Chen, & Guan, 2020; Guo et al, 2023; Huang, Chen, & Xiao, 2020; Hu, Huang, et al, 2021; Hu, Sun, et al, 2021), and also some studies focus on manufacturer encroachment under information asymmetry (Gao et al, 2021; Xu & Xu, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

Manufacturer encroachment strategies and decision timing considering the product traceability preferences under e‐commerce

Liu

et al. 2023

Manage Decis Econ

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Blockchain technology is applied for product traceability in e‐commerce supply chains. In this context, the paper investigates the channel problem and decision timing problem considering product traceability. Using game‐theoretic framework, the manufacturer encroachment strategies, order quantities and profits under different channel structure, and traceability level are characterized. Research shows that selling traceability products can expand potential market demand and increase the sales volume of products and the profits of manufacturers and retailers. Under encroachment, members with information advantage can maximize their own profits. Additionally, manufacturers can regain the high ground by adjusting traceability levels to influence wholesale prices.

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“…Meanwhile, based on the manufacturer and retailer configure channels, the firm's operational strategy is explored. Considering the channel introduction strategy, Nie et al [20] investigated the impact of bilateral supply chain encroachment and determined the conditions for upstream and downstream enterprises to establish new channels in the longitudinal supply chain.…”

Section: Supply Chain Channel Configurationmentioning

confidence: 99%

“…Motivated by mobile consumption, online sales are penetrating various industries and their operating modes are gradually beginning to diversify [17,18]. The platform, as the core role of online retail, attempts to establish self-operated channels in addition to providing open online direct channels for suppliers to seize the market; for instance, directly operated store (vivas) and Tmall Supermarket [19,20]. Meanwhile, some platforms, such as Pinduoduo.com, only sell products through agency channels, and they establish self-supporting channels such as Tmall.com in the future or not with the consumption upgrade.…”

Section: Introductionmentioning

confidence: 99%

Sustainable Strategy Analysis: Platform Channel Configuration and Slotting Fee Design under Differentiated Quality Investment

Xing

2022

Sustainability

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As a medium for matching supply and demand, platforms are changing industrial structures and consumption patterns to achieve sustainable operations. The platform establishes a self-operated channel on the basis of the present agent channel, which generates new conflicts and pollution problems. Considering the competition and quality investment, we investigate the platform’s optimal strategies, i.e., pricing, quality investment, channel format and slotting fee contract. The result shows that the platform adopting a dual channel structure contributes to sustainable operations because it can increase selling prices, sales volumes and consumers’ willingness when the channel introduction cost is lower. Meanwhile, the supplier always prefers the dual-channel structure because it can increase sales volume, profits and consumer surplus. Meanwhile, contrary to the commission rate, the emergence of competition promotes quality investment and guarantees consumer satisfaction. Under the intense channel conflicts, a variable slotting fee contract (VFC) is more profitable than a unit fixed slotting fee contract (UFC) owing to alleviating the competition; otherwise, the UFC has a larger improvement effect on profits. Meanwhile, with the increase in consumer quality sensitivity, UFC gradually cannibalizes VFC and occupies the core position in the operation.

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The dark side of bilateral encroachment within a supply chain

Cited by 11 publications

References 41 publications

Manufacturer encroachment and quality investment decisions in a two‐period supply chain

Manufacturer encroachment and quality investment decisions in a two‐period supply chain

Manufacturer encroachment strategies and decision timing considering the product traceability preferences under e‐commerce

Sustainable Strategy Analysis: Platform Channel Configuration and Slotting Fee Design under Differentiated Quality Investment

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