The impact of platform’s information sharing on platform’s private label under manufacturer encroachment and selling format decision

Canran Gong, Joshua Ignatius, Huaming Song*, Junwu Chai, Steven James Day

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Motivated by recent practice observations, we consider an incumbent manufacturer who has an existing wholesale contract with a e-commerce platform, which the latter sells as a private label product in its online marketplace. In this context, the manufacturer launches its follower product, which will coexist alongside the private label product on the platform. We study the interplay between the manufacturer’s choice of selling format (i.e., reselling or agency) and how this choice influences the platform’s decision to share (or not to share) demand information with the manufacturer (i.e., information sharing policy). In particular, we examine how the manufacturer’s selling format choice is impacted by the platform’s information sharing policy when subjected to perceived information accuracy. Using game-theoretic analyses, we find that under low perceived information accuracy, the manufacturer adopts the agency format when the commission rate is low but the reselling format when the commission rate is high. However, the platform withholds the demand information. More interestingly, when the commission rate and perceived information accuracy are both high, the manufacturer switches from the reselling to the agency format and this induces the platform to share demand information. This benefits both the manufacturer and the platform with the Pareto-improving zone expanding when perceived information accuracy is at least moderate but shrinking when the market size potential of the follower product increases. Ultimately, both parties can benefit from information sharing once in business and when the commission rate is high. The platform should also invest in greater information accuracy in such conditions.
Original languageEnglish
Pages (from-to)141-155
Number of pages15
JournalEuropean Journal of Operational Research
Volume317
Issue number1
Early online date25 Mar 2024
DOIs
Publication statusE-pub ahead of print - 25 Mar 2024

Bibliographical note

Copyright © 2024 Elsevier B.V. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

  • E-commerce
  • Information sharing
  • Product competition
  • Selling format

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