# Manufacturer Channel Encroachment and Evolution in E-Platform Supply Chain: An Agent-Based Model
## 1 Introduction  
Online shopping has now become a familiar form of shopping for consumers. Large e-commerce platforms, such as JD.com, have integrated manufacturer resources to create a category-rich online marketplace that has become a popular shopping channel for consumers [1]. The overall revenue for JD.com in 2021 was RMB 951,592 million, an increase of 27.6% from the previous year. While e-commerce platforms keep expanding in the context of the Internet, manufacturers are establishing new sales channels. The establishment of direct sales channels by manufacturers, such as official websites, applets, and apps, is known as channel encroachment by manufacturers [2].  
Channel encroachment by manufacturers is cannibalization for e-commerce platforms and may have some impact on demand. For manufacturers, establishing a new channel means incurring new costs and there will also be issues with channel competition. Thus, the manufacturer's channel decision is a key operational decision. The issue of channel competition has also generated sufficient discussion among scholars.  
The e-commerce supply chain is a complex system and the manufacturer's channel decisions have an impact on various aspects of the system as a whole, as well as being influenced by different factors. For the problem of channel encroachment in e-commerce, previous research has mainly used game theory methods to build mathematical models for analysis, but lacks a multi-period dynamic discussion from the perspective of multiple subjects. How will manufacturers make price adjustments in a dynamic decision-making environment? How will the manufacturer's encroachment strategy change in the face of consumer comparison and choice? What factors will have an impact on manufacturers'channel strategies? What equilibrium will be reached in the e-commerce supply chain after multiple periods?  
An agent-based model of the e-commerce supply chain is created to solve these problems in this study, and multi-period simulations are conducted. We conduct different scenarios by varying parameters, recording, and analysing the data for each scenario. Our main findings are as follows: (1) The most profitable circumstances for manufacturers are meantime the least profitable ones for the e-commerce platform, which means that manufacturer encroachment leads to a loss of profit for the platform. (2) Consumer preferences, such as channel preferences and quality preferences, benefit e-commerce platforms and are bad for manufacturers. (3) Manufacturers are more likely to engage in channel encroachment when consumers are less sensitive to product quality and have no channel preference. Higher commission rates and maintenance costs for direct sales channels will both reduce manufacturers' propensity for channel encroachment.  
The rest of this paper is organized as follows. The previous study is summarized in Section 2. Section 3 explains the model's setup and provides five alternative scenarios. The analysis is presented in Section 4 together with the results from the simulation. Section 5 discusses the implications of the model results for practice and the extension direction of the model. The findings of the research and the managerial insights are summarized in Section 6.