Title: Measuring modularity on manufacturers' distribution channel strategies: direct selling, reselling or agency selling

Authors: Qinyu Song; Meng Yang; Yaodong Ni

Addresses: Glorious Sun School of Business and Management, Donghua University, Shanghai, 200051, China ' School of Economics, Ocean University of China, Qingdao, 266100, China ' School of Information Technology and Management, University of International Business and Economics, Beijing, 100029, China

Abstract: In recent years, consumers not only pursue cost-effective products but also begin to attach importance to individual customisation. This paper investigates the effects of the modularity level on a manufacturer's three channel strategies. We find that the modularity level under reselling and agency selling is lower than that under direct selling. Considering modularity, the retail price under agency selling is lower than that under direct selling. Therefore, when the consumer pays attention to the modular design, if the commission fee is high (low), the manufacturer will adopt the direct selling (agency selling) model. However, when the consumer's customisation concern is weak, the manufacturer prefers the reselling format. In addition, referring to dual distribution channels, the manufacturer may authorise the modular design to the retailer when the modular-sensitive the parameter is high. [Submitted: 29 August 2023; Accepted: 5 March 2024]

Keywords: distribution channel; modularity; agency selling; reselling; game theory.

DOI: 10.1504/EJIE.2025.146505

European Journal of Industrial Engineering, 2025 Vol.19 No.4, pp.539 - 571

Received: 29 Aug 2023
Accepted: 05 Mar 2024
Published online: 02 Jun 2025 *

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