Abstract
With the explosion of the Internet and the reach that it affords, many manufacturers have complemented their existing retail channels with an online channel, which allows them to sell directly to their consumers. Interestingly, there is a significant variation within product categories in manufacturer's use of the Internet as a direct distribution channel. The main objective of this study is to examine the strategic forces that may influence the manufacturer's decision to complement the retail channel with a direct online channel. In particular, we are interested in answering the following questions: (I) Why is it that in some markets only a few firms find it optimal to complement their retail channels with a direct Internet channel while other firms do not? (II) What strategic role (if any), does the direct Internet channel serve and how do market characteristics impact this role?
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