Abstract
This paper takes the supply chain perspective to study the choice of selling model for manufacturers and e-tailers. To accomplish our objective, we consider three selling models, including reselling, agency selling, and mixed selling. By comparing and analyzing the equilibrium outcomes of the three selling models, we obtain some beneficial results. These results show that manufacturers and e-tailers cannot manage to make a profit at the same time whether they choose the reselling model or agency selling model. Our results also show that the mixed selling model may improve supply chain performance, as long as the cross-price elasticity is not low. Especially when the cross-price elasticity is comparatively high, a manufacturer and an e-tailer in vertical competition can achieve a profit-Pareto-improving situation, regardless of the market share of the e-tailer.
Highlights
Related WorkOur research is closely related to two streams of literature: literature on (i) supply chains consisting of electronic retailers and manufacturers and (ii) agency selling in electronic commerce
With the advent of the mobile commerce era, some e-tailers who adopted reselling in the past began to allow upstream manufacturers to sell products directly through the e-tailers’ electronic channels
By comparing the two models, we find that the manufacturer makes more profits in the reselling model, and the e-tailer makes more profits in the agency selling model
Summary
Our research is closely related to two streams of literature: literature on (i) supply chains consisting of electronic retailers and manufacturers and (ii) agency selling in electronic commerce. In the study of supply chains that include manufacturers and e-retailers, scholars have focused their research on reselling and drop shipping. Johnson [21] investigated strategic interactions and market outcomes in the “agency selling” and “reselling” of sales He found that adopting the agency selling can initially raise prices and raise the profits of rival retailers. Based on the above papers, we find that (i) the above studies focus on the conditions of adopting agency selling, they almost do not consider mixed selling which consists of reselling and agency selling between manufacturers and e-tailers and (ii) even though one article innovatively studies the mixed selling model, its specific research object is horizontal competition and coordination between two suppliers under different model selections. This paper focuses on the coordination of manufacturers and e-tailers in vertical competition on the choice of reselling, agency selling, or mixed selling. us, based on the exploration of reselling and agency selling, this study may offer some further insight into mixed selling, which is currently common in electronic commerce
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