Decision policies on players’ different risk combination under supplier encroachment

E-commerce provides suppliers with the flexibility to operate an online arm via a platform in addition to their pre-existing physical stores. Although such supplier encroachment is becoming increasingly prevalent in e-commerce markets, the literature on supplier encroachment traditionally assumes that suppliers sell products to consumers directly and argues that supplier encroachment can mitigate double marginalisation problems that can secure Pareto improvements. This paper narrows this gap by investigating the implications of the supplier encroachment with an online platform under two scenarios (i.e., the platform owner forgoing or retaining its entry options). A central result obtained is that, unlike supplier-owned direct channels and in addition to the ‘win-win’ outcomes for the supplier and the traditional retailer, supplier encroachment with an online platform may also lead to ‘win-lose’ and ‘lose-lose’ outcomes. Furthermore, when the platform owner retains its entry option, such encroachment is always detrimental for the traditional retailer but beneficial for the supplier.

Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The implications of supplier encroachmentviaan online platform

chen

Yan

2022

“…Our work also relates to suppliers' encroachment in a supply chain (see, e.g., Liu and Zhang, 2006;Li et al, 2014Li et al, , 2015Chen, Ping et al, 2020;Ma, Junhai and Hong, Yalan, 2021). Arya et al (2007) showed that encroachment is beneficial to the retailer when no synergies are admitted by the supplier.…”

Section: Literature Reviewmentioning

confidence: 96%

Impact of quality decisions on information sharing with supplier encroachment

Hou

Lin

et al. 2022

This study examines a retailer's decision to share market demand information in a supply chain wherein a supplier sells a product with a certain level of quality to a retailer, who then resells it to the end consumer. It also considers whether a supplier should establish a direct selling channel by incurring a fixed entry cost to compete with the retail channel. Although conventional wisdom indicates that a retailer may voluntarily disclose information under ex-ante supplier encroachment, our results show how and why a retailer may share information with the supplier who encroaches on the retail market with a decision on quality. Specifically, our findings reveal that information sharing is beneficial to the retailer when the quality cost coefficient is low and entry cost is relatively low, even under encroachment by the supplier. Moreover, the retailer may prefer to disclose demand information to the supplier if the quality cost coefficient is low, even when the entry cost is high, under non-encroachment. Interestingly, we found that the supplier prefers to encroach if the retailer shares demand information when the entry cost is moderate. Further, we found that the retailer has a higher incentive to share information under supplier encroachment compared with non-encroachment. These results are in sharp contrast with the extant literature.

“…Recent studies considering encroachment under information asymmetry in a single selling period include Li et al [27,28], Huang et al [22], Yang et al [49], and Zhang et al [52], and recent studies considering encroachment under information symmetry in two-period settings include Xiong et al [45] and Yan et al [48]. More recently, Chen et al [12] studied a supplier encroachment problem in a supply chain in which the supplier and the retailer exhibit different risk attitudes and showed that in the supplier-led Stackelberg game, the combination of the supply chain members with preferred risk attitudes does not necessarily benefit the supply chain. Liu et al [31] considered a supply chain with one supplier and multiple retailers and showed that supplier encroachment hurts the supplier when the number of retailers is sufficiently large.…”

Section: Literature Reviewmentioning

confidence: 99%

Product rollover and direct sales decisions in dual-channel supply chains

Hsieh

Putera

2022

This study investigates product rollover and direct sales decisions in a supply chain with one fashion manufacturer and one retailer when two style generations are sequentially introduced to the market over two periods. The retailer serves as the exclusive sales channel during the introductory period of a style generation. Both the retailer and manufacturer are capable of selling the old style generation in the second period. The retailer adopts dual rollover if she sells the old style generation, and single rollover if she does not. We develop a two-stage game to explore the chain members’ equilibrium decisions while accounting for the manufacturer’s cost inefficiency in direct sales and consumers’ mental account deficit. We find that the manufacturer’s cost inefficiency has double-edged effects and can offset the negative effect of consumers’ mental account deficit on the introduction of a new style generation. Furthermore, a win-win outcome can be achieved when the manufacturer with an intermediate level of cost inefficiency engages in direct sales and consumers have high valuations of the old style generation or when the manufacturer with significant cost inefficiency does not engage in direct sales.