TY - JOUR
T1 - Does the online direct channel cannibalize or synergize the retail Network? The moderating impact of retailer competitive strength
AU - Van Crombrugge, Michiel
AU - Holtrop, Niels
AU - Cleeren, Kathleen
AU - Breugelmans, Els
N1 - data: Secondary data (confidential) from a toy manufacturer
PY - 2024/1/1
Y1 - 2024/1/1
N2 - Manufacturers in the retailing sector extensively use online sales points of their own, known as online direct channels. This form of manufacturer encroachment offers consumers the possibility to purchase directly from the manufacturer and hence may cannibalize retailer sales. However, it may also create synergy effects by increasing brand awareness, which may create additional retailer sales. In this research, we investigate the cannibalistic versus synergetic nature of the relationship between an established online direct channel and the retail network and assess whether retailer characteristics related to competitive strength impact this relationship. Using unique sales data from the toy industry and vector autoregressive modeling, we find that the short-term cross-channel price elasticity of online direct channels on retailer sales is negative and significant, indicating a synergetic relationship on average. However, the impact is heterogenous across retailers. Our analysis reveals that acquisition utility components of competitive strength, such as price and innovativeness, especially for large items, can enhance synergetic effects and mitigate the risk of cannibalization. Transaction utility components, such as online presence or the number of physical stores, do not play a moderating role.
AB - Manufacturers in the retailing sector extensively use online sales points of their own, known as online direct channels. This form of manufacturer encroachment offers consumers the possibility to purchase directly from the manufacturer and hence may cannibalize retailer sales. However, it may also create synergy effects by increasing brand awareness, which may create additional retailer sales. In this research, we investigate the cannibalistic versus synergetic nature of the relationship between an established online direct channel and the retail network and assess whether retailer characteristics related to competitive strength impact this relationship. Using unique sales data from the toy industry and vector autoregressive modeling, we find that the short-term cross-channel price elasticity of online direct channels on retailer sales is negative and significant, indicating a synergetic relationship on average. However, the impact is heterogenous across retailers. Our analysis reveals that acquisition utility components of competitive strength, such as price and innovativeness, especially for large items, can enhance synergetic effects and mitigate the risk of cannibalization. Transaction utility components, such as online presence or the number of physical stores, do not play a moderating role.
KW - Cannibalization
KW - Competitive Strength
KW - Manufacturer Encroachment
KW - Online Direct Channel
KW - Synergy
U2 - 10.1016/j.ijresmar.2024.08.001
DO - 10.1016/j.ijresmar.2024.08.001
M3 - Article
SN - 0167-8116
JO - International Journal of Research in Marketing
JF - International Journal of Research in Marketing
ER -