The Changing Face of Distribution Channels: Partial Forward Integration and Strategic Investments

• DOI: 10.1111/poms.12006
• Publication Date: 2013-03-04T23:08:50Z
• Authors: Anil Arya; Brian Mittendorf
• Keywords: Competitor analysis; Promotion (chess); Retail industry; Vertical Integration

Recent years have seen a drastic transformation in the organization of wholesale and retail markets. Where once clear distinctions between suppliers competitors existed, now an era blurring boundaries has emerged. This been marked by introduction online channels for to provide products directly consumers while, at same time, traditional retailers too persist. Thus, are both customers many manufacturers. The consequences rapid emergence instances such partial forward integration not yet fully known. To this end, we study how can affect competing firms' strategic investments. We find that shifts environment from being one which firms invest undercut rivals more boosting demand, even their competitors. A case point is tendency manufacturer broadly brand promotion (benefiting itself its competitor), rather than heavy own sales channel. shift nature investments arising implies benefit alike, firm finds reliant on competitor supplies.