Interaction between the introduction strategy of the third‐party online channel and the choice of online sales format

Abstract

On the online platform of e‐tailers (e.g., Amazon), there are many third‐party retailers who can resell products by paying e‐tailers a platform usage fee. When e‐tailers sell manufacturers’ products through the agency selling or reselling format, manufacturers may also sell the products via the third‐party retailers, i.e., the third‐party online channel. Therefore, in an online retailing supply chain composed of a manufacturer, an e‐tailer ad a third‐party retailer, this paper employs game theory to study the interaction between the introduction strategy of such channel and the choice of online sales format. The results show that under the agency selling format, the manufacturer should always introduce the channel to reduce the loss caused by platform usage fee and the low sales efficiency; under the reselling format, if the platform fee rate is small, the manufacturer will introduce such channel because of benefiting from downstream competition brought by the channel, otherwise, vice versa. When the channel is introduced under both sales formats and the sales efficiency of the manufacturer is not very high or very low, with the discount factor of consumer utility in this channel being large, the e‐tailer should choose the reselling format even if the platform fee rate is large. In case the channel is introduced only under the agency selling format and the sales efficiency of the manufacturer is not very high or very low, even if the platform fee rate is very large, the e‐tailer should also choose the reselling format. These choices always benefit the manufacturer (i.e., two win‐win situations). Under the agency selling format, the third‐party retailer should always improve the utility gained from purchasing from this channel, but it should keep the utility at an appropriate level under the reselling format.

E-commerce channel management on the manufacturers’ side: ongoing debates and future research pathways

“…The varying approaches to channel choice strategy from the manufacturer’s perspective have attracted the attention of many scholars (Pu et al 2020 ; Wei et al 2021 ; Xu et al 2021 ; Shi et al 2021b ; Liu et al 2021a ). Pu et al ( 2021 ) considered the manufacturer’s marketing and pricing strategies to understand which channel is the best to adopt.…”

“…This scenario remains valid independently of the two e-tailers’ channel roles and the difference in the two e-tailers’ market shares. Shi et al ( 2021b ) elaborate on four other scenarios in which a manufacturer and its retailers can both consider the adoption of agency selling through a third-party marketplace platform. As long as channel competition is not too fierce, the manufacturer is better off incorporating a third-party marketplace to boost sales.…”

Operation strategy in an E‐commerce platform supply chain: whether and how to introduce live streaming services?

“…The first stream of literature concerns the decision‐making in EPSCs, which received considerable attention (Shi et al., 2022; Zhang et al., 2022b). The majority of previous studies mainly focus on the topics such as price strategy (Li et al., 2021b; Zhao et al., 2022), advertising investment (Du et al., 2019), service level (Bian et al., 2021; Guo et al., 2021b), and spillover effects (Xia and Niu, 2019).…”

“…The rise of Internet information and mobile technology over the past few years led to the rapid development of E‐commerce. Many E‐commerce platforms, such as Amazon, eBay, and JD, have entered to the E‐commerce market (Wang et al., 2019; Yoo and Jang, 2019; Shi et al., 2022). These platforms and their suppliers make up E‐commerce platform supply chains (EPSCs) (Tsunoda and Zennyo, 2021; Guan et al., 2022).…”

Effectiveness of self‐run vs. third‐party sales channels on the consumers' purchase intention: A multi‐method exploration of the moderating role of review volume

“…In other words, the standard of the goods and services in the self‐run channel is guaranteed by the e‐tailers. Additionally, e‐tailers enable tens of thousands of independent sellers to offer their products directly to customers via their websites (Cao et al, 2020; Shi et al, 2021; Zheng et al, 2022). For instance, JD.com hosted 250,000 third‐party stores in 2019 (JD, C 2021).…”