Decision-making and coordination in an e-commerce supply chain under channel selection

To capture more market share, manufacturers have recently set up sales channels on well-known e-commerce platforms, which has greatly changed the business environment. To investigate whether manufacturers should adopt the online dual-channel strategy, we build a Stackelberg game model based on the previous studies and study the optimal decisions and optimal profits of a manufacturer and e-commerce platforms under different strategic backgrounds. Our study shows that, first, the channel selection strategy of the manufacturer is affected by the attributes of the new channel. When consumers of the new channel are very sensitive to the price of the product, the manufacturer should maintain the original single-channel operational strategy; however, when consumers of the new channel are not sensitive to the price of the product, the manufacturer can adopt the strategy of online dual channels. Second, When the price elasticity of the new channel is in a specific range, the implementation of online dual channels will result in a decrease in the manufacturers’ profit but beneficial to the whole supply chain. Therefore, under such conditions, the e-commerce platform should give the manufacturer a certain amount of transfer payment to motivate its implementation of the dual-channel strategy.