Agency or reselling? Supplier’s online channel strategies with platform financing

Yang Liu, Jizhou Lu and Nina Yan

European Journal of Operational Research, 2024, vol. 318, issue 3, 1014-1027

Abstract: Online finance implemented by e-commerce platforms assists small and medium-sized enterprises in overcoming capital shortages and advancing channel development. We investigate the interplay between channel strategy and platform financing within a dual-channel supply chain comprising a capital-constrained supplier, an e-commerce platform, and an offline retailer. The supplier has access to various sales services (i.e., reselling and agency selling) as well as financing services from the e-commerce platform. Using a game-theoretical model, we analyze the financing conditions under two channel strategies and explore the supplier’s optimal channel strategy. Our research results reveal several key insights. Firstly, whether to choose platform financing under varying channel strategies depends on the supplier’s capital constraints and the platform’s interest rate. High capital constraints allow the supplier to benefit from platform financing. Secondly, the determination of the supplier’s optimal channel strategy primarily hinges upon factors such as the supplier’s production cost and financial constraints, as well as the interest and commission rates set by the platform. Additionally, the e-commerce platform imposes stricter financial requirements on the supplier to offer financing under the agency selling strategy compared to the reselling strategy. Furthermore, in the case of relatively high (or low) production costs, choosing the reselling strategy (or the agency selling strategy) to secure retailer finance (or agency finance) can realize a Pareto improvement. Our findings underscore the significant role of platform finance and provide valuable insights for suppliers in developing channel strategies that effectively integrate both operational and financial considerations.

Keywords: Supply chain management; Platform financing; Channel strategy; Game theory (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:318:y:2024:i:3:p:1014-1027

DOI: 10.1016/j.ejor.2024.06.010

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