Handbook of Research on Distribution Channels
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Handbook of Research on Distribution Channels

Edited by Charles A. Ingene, James R. Brown and Rajiv P. Dant

Distribution channels are the most complex element of the marketing mix to fully grasp and to profitably manage. In this Handbook the authors present cutting-edge research on channel management and design from analytical, conceptual, and empirical perspectives. The breadth of this Handbook makes it appropriate for use in a doctoral course on distribution channels, or as a knowledge-broadening resource for faculty and researchers who wish to understand types of channels research that are outside the scope of their own approach to distribution.
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Chapter 4: Platform retailing: from offline “stores within a store” to online “marketplaces”

Kinshuk Jerath and Z. John Zhang

Abstract

Platform retailing, also known as agency selling, is an arrangement in which an upstream seller, typically a manufacturer, is enabled by the retailer to interact directly with consumers and given control of activities such as pricing, merchandising, service provision, and so on. The platform retailing arrangement is becoming increasingly popular in offline retailing, in the form of “stores within a store” that are found in department stores such as Macy’s and Nordstrom, as well as in online retailing, in the form of online “marketplaces” such as Amazon Marketplace and Etsy. In this chapter, the authors analyze the platform retailing arrangement in its different contexts to understand its advantages (and shortcomings) for upstream sellers, retailers, and consumers. The key insight of the chapter is that platform retailing makes the distribution channel more efficient than the standard reselling arrangement but this happens at the cost of the retailer giving up control of pricing. Under different conditions, one force dominates the other and the choice of channel arrangement is based on this tradeoff. The analysis provides guidelines to both retailers and manufacturers to navigate this arrangement.

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