Supplier Encroachment, Information Sharing, and Channel Structure in Online Retail Platforms

Abstract

I n this study, we develop a game-theoretic model to study the encroachment and information sharing decisions in a supply chain with a manufacturer selling through an online retail platform. In the base model, the manufacturer decides whether to encroach or not by selling through an agency channel, in addition to an existing reselling channel, at the same platform, who decides whether or not to share information with the manufacturer. We fully characterize the equilibrium decisions and show how they depend on the commission rate of the agency channel, channel substitutability, and information accuracy. Our analysis unfolds a novel wholesale price effect that extends related results in the literature. We also show that encroachment and information sharing are complementary, and therefore managers should not ignore the impact of one decision on the other decision even when the latter is not a primary motivation of the former. We study several model extensions to obtain additional insights and show that the major findings of the base model are robust and remain mostly valid when some modeling assumptions are changed.

Supplier encroachment and information transparency on fresh produce e‐commerce platform: Impacts on the traditional channel

“…With the popularity of the platform's agency channel, few scholars begin to study whether suppliers should encroach through the platform's agency channel. For example, Ha et al (2022) investigate whether the supplier that cooperates with the platform in the reselling mode should enter through the platform's agency channel. They also analyze the platform's incentive to disclose information under different channel structures.…”

“…Compared with the supplier, the retailer and the platform who are closer to end consumers can predict market demand from consumption data. In reality, many platforms cooperate with the supplier in information sharing (Ha et al, 2022; Niu et al, 2022; Zhang & Zhang, 2020). For instance, JD.com provides big data analysis reports to some suppliers to help them understand the market demand (Ebrun.com, 2018).…”

Implications of product line competition on channel matching strategies in a retail platform

“…Xie et al (2021) study the impact of a supplier's capacity on his channel selection in a retail platform. Ha, Luo, and Shang (2022) study whether a manufacturer encroaches on the same platform through agency selling services in addition to a reselling channel and the platform's decision to share information. However, these studies do not consider the impact of multiple products on the supplier's channel selection.…”

Optimising small-scale electronic commerce supply chain operations: a dynamic cost-sharing contract approach

“…They have identified that asymmetric information always creates benefits for the player who has the advantage of additional information, and it can adversely affect the supply chain profits and costs of the less informed party. Few studies consider the impact of information sharing on the channel structure of online retailing (Ha et al, 2021;. Therefore, it is important to address the impact of asymmetric information on e-tailer supply chains, which mainly depends on accurate information.…”