Buyers' Strategic Behavior in B2B Multichannel Auction Markets: When an Online Posted Price Channel Is Incorporated into a Dutch Auction System

Firms are increasingly adopting different sales channels to reach new potential buyers. Yet, extant research has mainly focused on business-to-customer (B2C) online and offline posted price channels. Business-to-business (B2B) multichannel and, especially, systems with multiple pricing mechanisms are largely underexplored. This paper investigates the strategic behaviors of B2B buyers in a unique system where an online posted price channel is incorporated into a Dutch auction market sequentially. We follow buyers' purchasing paths and examine conditions under which B2B auction buyers will use the online posted price channel. We incorporate learning and experience and demonstrate how buyers' behaviors evolve. We investigate an emerging group of buyers who use different price mechanisms and their surplus extraction activities. We further explore how the market flow changes when posted prices are incorporated. Our results, using an extensive data set from the world's largest flower market, highlight the importance of quantity demand, product diversity, and experience in explaining the choice of the new posted price channel. We find a significantly higher average loss of surplus at the product level for multichannel buyers than for single channel buyers and a reduction in the number of small orders in the auction channel. Subsequently, theoretical and managerial implications for B2B multichannel markets and market design are discussed.