Abstract: With the rapid development of e-commerce, the manufacturer sell its product directly to the customer through Web-based channel while keeping the traditional retail channel. In general, electronic channel widens the market scope, decreases the operation cost, and satisfies the individual requirement. However, it always hurts the retailers profit, leads to retailers' resistances and gives rise to the channel conflict. Previous researches have mainly discussed the dual channel coordination based on the modified contract of traditional channel. In order to overcomes the weakness of previous studies to design the contract to focus on both the dual channel coordination and channel conflict, a channel structure is considered where a manufacturer opens up a direct Internet channel to competition with the traditional channel directly and sells a single product via its retailers' traditional channels and Internet direct channels. Further,the aggregate demand function with demand depending on price under dual channel is developed based on consumer's utility theory, and the decision model is constructed based on the Game Theory.At last, the equilibrium results of decentralized and centralized dual-channel supply chain are discussed based on profit maximization and Stackelberg game. The equilibrium results show that when manufacturer opened an e-direct channel and operated dual channels distribution system which makes the retail's profit decrease and lead to the channel conflict. In order to coordinate the dual channel supply chain, a modified contract of wholesale price added e-channel price is designed, which can coordinate the dual channel and remove double marginalization effect. In order to explore whether the designed contact can resolve the channel conflict, a modified revenue sharing contract added e-channel price and lower wholesale that coordinated the dual channel and solved the channel conflict is proposed, which make the members of supply chain realize the Pareto improvement. In summary, not only the dual channel coordination and the dual margin effect based on the modified contract of wholesale price added e-channel price, but also the channel conflict based on a modified revenue sharing contact are resolved. The designed contract can guarantee that the profit of members under dual channel is better than in single traditional channel. That is to say, the contact is effective and executable.

Key words: dual channel, electronic market, channel conflict, coordination, contract