Channel Conflict and Coordination in the E‐Commerce Age

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…