Manufacturer encroachment and channel conflicts: A systematic review of the literature

To reach more customers, many manufacturers utilize multiple distribution channels consisting of a direct and an indirect sales channel. In particular, the strong growth of internet sales (or e-commerce) has driven companies to redesign their distribution channels to take advantage of the opportunities e-commerce offers. Opening a direct sales channel, however, also leads to managerial challenges. The most significant one is channel conflicts that manufacturers encounter when adding a direct channel to an existing traditional channel. Manufacturers that engage in direct selling may compete with their extant independent retailers. Competition between manufacturers and retailers starts when the former intrude into the market (segment) that was traditionally served by the retailers via manufacturer-owned stores and online sales, which is commonly referred to as manufacturer or supplier encroachment. This paper aims to provide a systematic and exhaustive review of multi-channel distribution systems in a combined forward and reverse supply chain where the manufacturer competes with its independently-owned intermediaries (retailers or wholesalers). First, to organize our discussion, all works obtained during the literature search were classified and evaluated in accordance with a proposed conceptual framework. The paper then discusses the sampled works and evaluates possible research gaps. Finally, based on the analysis of the literature, managerial implications and promising future research directions are proposed.