(Fr)Enemies: The Impact of Manufacturer Direct-to-Consumer Channels on Retail Sales Performance
In a variety of sectors, manufacturers are selling their products directly to consumers over the Internet or via brand stores, offering consumers the possibility to skip traditional retail channels and purchase directly from the manufacturer. To gain a better understanding of the impact of these forms of supplier encroachment, it is important to investigate the sales consequences of manufacturer direct-to-consumer efforts on retail sales performance. Do consumers shift purchases from traditional retailers to the manufacturer (cannibalization)? Or can both parties co-exist, and can the opening of direct-to-consumer channels create a win-win situation (synergy)? Apart from this general question of win or lose in terms of sales, we additionally investigate the potential moderating factors that help or hinder retailers to withstand supplier encroachment. Example factors include retailer characteristics (e.g., assortment size, composition, price, promotion strategy), and category characteristics (e.g., level of involvement). We have unique sales data, covering two different sectors, on three real-life retail situations where a manufacturer sells its products through both a traditional retail network and a direct-to-consumer channel.