Supply chain choice with financial constraints on the internet: Drop shipping vs. traditional channel

•Supply chain choice on internet first depends on the newsvendor critical fractile.•Then, the supply chain choice rests on the retailer’s preference and capital level.•Retailers cannot obtain the trade credit unless their capital exceeds a threshold.•Under the full trade credit type, wholesalers may decide the channel structure.•Decision zones for the channel structures are found under each trade credit policy.