Choice of Channel Structures in the Presence of B2B Online Exchange

B2B online exchange has provided manufacturers and retailers an alternative outlet to trade commodity or service. Some manufacturers and retailers began to participate in the B2B online exchange. According to whether the manufacturer and the retailer participating in the B2B online exchange or not, four different channel structure appears. This paper compares these channel structures to investigate how the B2B online exchange affects the strategies of the manufacturer and the retailer. Our study shows that whether participating in the B2B online exchange or not, the manufacturer has to consider the tradeoff between the low salvage price and the risk caused by the price volatility in the B2B online exchange. When the retailer participates in the B2B online exchange, the manufacturer sets a lower wholesale price. Correspondingly, the retailer orders more via contract and sets a lower retail price, which benefits the end customers.