IDEAS home Printed from https://ideas.repec.org/p/ecl/illbus/02-0123.html
   My bibliography  Save this paper

Impact of Web-Based e-Commerce on Channel Strategy

Author

Listed:
  • King, Ruth C.

    (U of Illinois at Urbana-Champaign)

  • Sen, Ravi

    (U of Illinois at Urbana-Champaign)

  • Xia, Mu

    (U of Illinois at Urbana-Champaign)

Abstract

The existing literature and industry trends suggest that web-based channels are fast becoming an integral part of the traditionally offline retailers' overall channel strategy. This paper takes a game theoretic approach to study the impact of web-based e-commerce on the choice of distribution channel strategy by the retailers. The current practice by most firms is to adopt a multi-channel strategy, which includes both web-based channels and preexisting offline channels. Our analysis validates this trend by identifying it as one of the equilibriums of the game, resulting from the competitive pressure induces by the other retailers. However, a more interesting outcome from our analysis is that there are other possible outcomes. The other possible outcomes include one where some sellers adopt a coordinated dual channel (i.e., both online and offline) strategy while the others continue selling through traditional offline channels, and another one where all the sellers switch to online channels. The latter outcome is unlikely to occur for industries where traditionally offline sellers have invested heavily in distribution-specific assets. However, it does provide an explanation for new web-based sellers' reluctance to include offline channels in their overall channel strategy.

Suggested Citation

  • King, Ruth C. & Sen, Ravi & Xia, Mu, 2002. "Impact of Web-Based e-Commerce on Channel Strategy," Working Papers 02-0123, University of Illinois at Urbana-Champaign, College of Business.
    • Handle: RePEc:ecl:illbus:02-0123
    as

    Download full text from publisher

    File URL: http://www.business.illinois.edu/Working_Papers/papers/02-0123.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vicki G. Morwitz & David C. Schmittlein, 1998. "Testing New Direct Marketing Offerings: The Interplay of Management Judgment and Statistical Models," Management Science, INFORMS, vol. 44(5), pages 610-628, May.
    2. Sumit K. Majumdar & Venkatram Ramaswamy, 1995. "Going direct to market: The influence of exchange conditions," Strategic Management Journal, Wiley Blackwell, vol. 16(5), pages 353-372.
    3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    4. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    5. Rajiv Lal & Miklos Sarvary, 1999. "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, INFORMS, vol. 18(4), pages 485-503.
    6. Minakshi Trivedi, 1998. "Distribution Channels: An Extension of Exclusive Retailership," Management Science, INFORMS, vol. 44(7), pages 896-909, July.
    7. Lumpkin, James R. & Hawes, Jon M. & Darden, William R., 1986. "Shopping patterns of the rural consumer: Exploring the relationship between shopping orientations and outshopping," Journal of Business Research, Elsevier, vol. 14(1), pages 63-81, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cao, Lanlan & Li, Li, 2018. "Determinants of Retailers' Cross-channel Integration: An Innovation Diffusion Perspective on Omni-channel Retailing," Journal of Interactive Marketing, Elsevier, vol. 44(C), pages 1-16.
    2. Cao, Lanlan & Li, Li, 2015. "The Impact of Cross-Channel Integration on Retailers’ Sales Growth," Journal of Retailing, Elsevier, vol. 91(2), pages 198-216.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oksana Loginova, 2009. "Real And Virtual Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 57(2), pages 319-342, June.
    2. Fahy, Colleen A., 2006. "Internet versus traditional retailing: An address model approach," Journal of Economics and Business, Elsevier, vol. 58(3), pages 240-255.
    3. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    4. Oksana Loginova & Andrea Mantovani, 2019. "Price competition in the presence of a web aggregator," Journal of Economics, Springer, vol. 126(1), pages 43-73, January.
    5. O. Loginova & A. Mantovani, 2015. "Information and Online Reviews," Working Papers wp996, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Maarten C.W. Janssen & Rob van der Noll, 2005. "Internet Retailing as a Marketing Strategy," Tinbergen Institute Discussion Papers 05-038/1, Tinbergen Institute.
    7. Eymann, Torsten (Ed.), 2007. "Tagungsband zum Doctoral Consortium der WI 2007 [WI2007 Doctoral Consortium Proceedings]," Bayreuth Reports on Information Systems Management 24, University of Bayreuth, Chair of Information Systems Management.
    8. Chris Forman & Anindya Ghose & Avi Goldfarb, 2009. "Competition Between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live," Management Science, INFORMS, vol. 55(1), pages 47-57, January.
    9. Oksana Loginova, 2007. "Real and Virtual Competition," Working Papers 0715, Department of Economics, University of Missouri.
    10. Sengupta Anirban & Wiggins Steven N., 2012. "Comparing Price Dispersion on and off the Internet Using Airline Transaction Data," Review of Network Economics, De Gruyter, vol. 11(1), pages 1-38, March.
    11. Jeonghye Choi & David R. Bell & Leonard M. Lodish, 2012. "Traditional and IS-Enabled Customer Acquisition on the Internet," Management Science, INFORMS, vol. 58(4), pages 754-769, April.
    12. Xiao, Tiaojun & Choi, Tsan-Ming & Cheng, T.C.E., 2014. "Product variety and channel structure strategy for a retailer-Stackelberg supply chain," European Journal of Operational Research, Elsevier, vol. 233(1), pages 114-124.
    13. Hui Li & Qiaowei Shen & Yakov Bart, 2018. "Local Market Characteristics and Online-to-Offline Commerce: An Empirical Analysis of Groupon," Management Science, INFORMS, vol. 64(4), pages 1860-1878, April.
    14. Yan, Ruiliang & Ghose, Sanjoy, 2010. "Forecast information and traditional retailer performance in a dual-channel competitive market," Journal of Business Research, Elsevier, vol. 63(1), pages 77-83, January.
    15. Fay, Scott, 2008. "Selling an opaque product through an intermediary: The case of disguising one's product," Journal of Retailing, Elsevier, vol. 84(1), pages 59-75.
    16. Yao, Dong-Qing & Liu, John J., 2005. "Competitive pricing of mixed retail and e-tail distribution channels," Omega, Elsevier, vol. 33(3), pages 235-247, June.
    17. Han, Haipeng & Lien, Donald & Lien, Jaimie W. & Zheng, Jie, 2022. "Online or face-to-face? Competition among MOOC and regular education providers," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 857-881.
    18. Fei Gao & Vishal V. Agrawal & Shiliang Cui, 2022. "The Effect of Multichannel and Omnichannel Retailing on Physical Stores," Management Science, INFORMS, vol. 68(2), pages 809-826, February.
    19. Taleizadeh, Ata Allah & Sadeghi, Razieh, 2019. "Pricing strategies in the competitive reverse supply chains with traditional and e-channels: A game theoretic approach," International Journal of Production Economics, Elsevier, vol. 215(C), pages 48-60.
    20. Rajiv Dewan & Bing Jing & Abraham Seidmann, 2003. "Product Customization and Price Competition on the Internet," Management Science, INFORMS, vol. 49(8), pages 1055-1070, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:illbus:02-0123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cbuiuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.