Supplier Encroachment in a Non-Exclusive Reselling Channel

By Parshuram Hotkar, Gilbert Stephen
Management Science | September 2021

DOI

pubsonline.informs.org/doi/abs/10.1287/mnsc.2020.3786

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Citation

Hotkar, Parshuram., Stephen, Gilbert. (2020). Supplier Encroachment in a Non-Exclusive Reselling Channel Management Science pubsonline.informs.org/doi/abs/10.1287/mnsc.2020.3786.

Management Science, 2020

Abstract

We consider a setting in which a nonexclusive reseller procures partially substitutable products from two suppliers, one of whom introduces a direct channel. We find that the presence of the second supplier alters many of the existing results about the interactions between a reseller and an encroaching supplier. For instance, the reseller’s and the supply chain’s benefit from the direct channel disappears when the product substitutability is sufficiently large. In addition, when the reseller is nonexclusive, the encroaching supplier may either sell exclusively through its direct channel even when that channel is less efficient than the reselling channel, or sell through both channels even when its direct channel is more efficient than the reselling channel. Neither of these would occur in an exclusive reselling environment with only one supplier.

Parshuram Hotkar is an Assistant Professor of Operations Management at the Indian School of Business (ISB). His primary area of interest is studying strategic interactions in competing supply chains with applications in omnichannel retailing and the pharmaceutical industry. He studies drug shortages due to frequent supply disruptions in the injectable drug supply chain. He has also collaborated with an advertising company for his work on social media platforms.

Professor Hotkar has received research awards from several renowned organisations, including INFORMS and the Decision Sciences Institute (DSI).

His teaching interests include supply chain optimisation, supply chain modelling, strategic procurement, operations management, and social media analytics.

Prior to joining ISB, he earned his PhD and MS in Information, Risk, and Operations Management from the McCombs School of Business at the University of Texas at Austin. He also holds an MS in Operations Management and dual degree (BTech and MTech) in Biotechnology from IIT Madras.

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