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

  • Xiaojing LiEmail author
  • Xingzheng Ai
Article
  • 23 Downloads

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 

Notes

Acknowledgements

The authors gratefully acknowledge financial support from the National Natural Science Foundation of China (Grants Nos. 71372140, 71531003 and 71432003), the Humanities and Social Science Planning Youth Fund of the Ministry of Education of China (Grants Nos. 16YJC630057)

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.School of BusinessSichuan Normal UniversityChengduChina
  2. 2.School of Economics and ManagementUniversity of Electronic Science and Technology of ChinaChengduChina

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