Strategic introduction of marketplace platform and its impacts on supply chain

Abstract

With the increasing popularity of platform economics, supply chain members are facing strategic decisions regarding whether to introduce online marketplace platforms in addition to their existing brick-and-mortar sales channels. Our study investigates this problem by quantitatively modelling and evaluating four different channel structures defined by whether the manufacturer, the retailer, neither or both choose to adopt the platform to enhance their sales. It is shown that the introduction of a marketplace platform is beneficial for supply chain members only if the degree of competition among different channels is low. Moreover, modes MR, MN and NN are shown as possible equilibrium channel structures depending on the degree of channel competition and the platform fee rate, and it is found that the Nash and Stackelberg equilibriums coincide, indicating that there is no first-mover advantage in platform introduction. Some extended cases are explored by incorporating the endogenous platform fee rate, platform spillover effect, and asymmetric market base, and the robustness of the results is analysed.