A choice of selling format in the online marketplace with cross-sales supply chain: Platform selling or traditional reselling?

Xiaojing Li () and Xingzheng Ai
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Xiaojing Li: Sichuan Normal University
Xingzheng Ai: University of Electronic Science and Technology of China

Electronic Commerce Research, 2021, vol. 21, issue 2, No 7, 393-422

Abstract: Abstract In the online retail market, how to work with upstream suppliers is a key issue for downstream online retailers (e-retailers). Online retailers can choose between functioning either as the “two-sided platforms” (e.g., Taobao.com or eBay.com) allowing suppliers to sell directly to customers by paying a revenue-sharing fee, or as the “resellers” (e.g., Wal-mart.com or JingDong.com) that purchase products from suppliers, and then resell them to customers. Given the rapid growth of e-commerce over past few years, this choice, which is the focus of this article, has become an important practice-based decision. We develop a game-theoretic model for a cross-sales supply chain in which two suppliers deal with two common online retailers. As Stackelberg leaders, online retailers can operate either as a two-sided platform (serving both suppliers and customers) or as a reseller (ordering from suppliers and selling competing products on its own platform). Each supplier adopts either an exclusive-sales strategy, selling products through an exclusive e-retailer, or a cross-sales strategy, selling products through two e-retailers. We analyze the optimal decisions for both e-retailers and suppliers in competing supply chains and describe the system equilibrium for the online marketplace.

Keywords: E-business; Selling format choice; Supply chain competition; Online marketplace; Game theory (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10660-019-09370-7

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