Abstract: This paper investigates the optimal channel operation strategy of manufacturers in the product sales market where two iterations of products coexist. Combined with the retail attributes of B2C e-retailers and the physical characteristics of manufacturer offline direct sales channels, considering consumer showroom behavior towards new products, game models are established from the perspective of manufacturers under three modes: distributing new products and directly selling old products, distributing new products and directly selling both iterations of products, and distributing the two iterations of products. The optimal pricing decisions for two iterations of products under the three modes are analyzed, while the optimal sales mode and product launch strategy of manufacturers are discussed on this basis. Results show that when consumers have low access cost to offline direct sales channels, manufacturers should choose to sell both iterations of products through offline direct sales channels; when the cost of accessing offline direct sales channels is moderate, the optimal decision for manufacturers is to distribute new products online and sell old products offline to avoid the competition effect between two iterations of products; otherwise, manufacturers should choose to distribute new products online and not sell products through direct sales channels, simultaneously, they should play the showroom function of offline channels to obtain incremental benefits. Moreover, consumer showroom behavior can bring incremental demand for new product sales in B2C e-commerce, but it further intensifies the competition for new product demand between online and offline channels.

Key words: online and offline channels, two iterations of products, offline access cost, showroom behavior