Selecting online distribution modes for differentiated products in a platform supply chain

Zhichao Zhang, Haiyan Xu, Ginger Y. Ke and Kebing Chen

International Journal of Production Economics, 2022, vol. 244, issue C

Abstract: E-commerce platforms can either serve as product resellers or provide online marketplaces. Selecting the better of these two online distribution modes or applying the combination of them has always been a critical issue for a supplier. The present work aims to assist a dominant supplier manufacturing differentiated products in determining the best online mode under different distribution strategies. Starting from the selective marketing strategy, three models matching products with individual modes are respectively formulated and studied for equilibria. The research is then extended to the intensive marketing strategy, where the combination of modes for each product is addressed. Our analytical results reveal that the mode selection highly relies on a product's inherent attribute, defined as the Cost-Market-Substitution (CMS) factor. Both the commission rate and slotting fee can be functioned as important moderators for relieving the conflict of distribution modes. The optimal commission rate to maximize the win-win region is shown to be highly dependent upon the substitution intensity across the differentiated products, and hence can be attained accordingly.

Keywords: Platform supply chain; Operations management; Distribution strategy; Online marketplace; Differentiated products (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:244:y:2022:i:c:s0925527321003601

DOI: 10.1016/j.ijpe.2021.108384

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