Distribution channel

Channel 1:Tie up with the manufacturers Pros

Leverage the economies of scale Low price strategy Faster increase in market share

Cons
Resistance from the manufacturers Affecting the long term relationship with wholesalers

Distribution channel
Channel 2:Make use of existing distribution channel Pros
Developing long term relationship with the wholesalers in the new market Better understanding of existing channel

Cons
Low price strategy will give lesser margins Loss of competitive advantage

Recommendation
Use the existing channel Try to compensate the loss of using existing channel by tying up with manufacturers who are willing to Pricing should be done by Toys R US instead of following manufacturers suggested price Continue with low pricing strategy to increase the market share and attract more manufacturers to tie up