Manufacturer's sales format selection and information sharing strategy of platform with a private brand

Abstract

PurposeIn recent years, private brands for e-commerce platforms have experienced rapid growth. However, whether these platforms developing private brands should share their demand information with others and how such information sharing affects the sales format selection of national brand manufacturers have puzzled firm managers in practice. This paper aims to investigate the information-sharing strategy for the e-commerce platform and its influence on the sales format selection in the presence of the private brand.Design/methodology/approachThe authors use a game-theoretical model to examine the interaction between the information-sharing strategy and sales format selection in a supply chain consisting of a manufacturer and a platform that operates a private brand.FindingsThe equilibrium results show that when the commission rate is low, the manufacturer favors agency selling, and the platform shares demand information with the manufacturer; when the commission rate is high, the manufacturer prefers reselling, and the platform does not share the information. This preference is affected by information forecasting accuracy; as the information forecasting accuracy increases, the manufacturer prefers to adopt agency selling, and the platform tends to share the information. Interestingly, under agency selling, sharing information with the manufacturer can increase the platform’s profit from selling the private brand and achieve a win-win situation for them. Furthermore, we show that the manufacturer can inspire the platform to share the information with himself by adopting agency selling, whereas the platform sharing the information improves the probability that the manufacturer adopts agency selling. Moreover, the manufacturer may have a first-mover advantage. In particular, the manufacturer moving first increases the likelihood that the manufacturer chooses agency selling and the platform shares the information.Originality/valueThis paper contributes to sales format literature by exploring the effect of information sharing strategy on sales format selection in the presence of the private brand and can help manufacturers and platforms to make suitable decisions regarding information sharing and sales format selection.