The Implications of Socially Responsible Retailing Platform on Channel Structure Choice and Product Quality Decisions

Abstract

At present, corporate social responsibility has been widely mentioned by the international society, especially platform enterprises. For a platform that assumes social responsibilities, consumer surplus is a rather critical aspect, and product quality is one of the most important factors directly related to consumers. This paper studies a supply chain consisting of a manufacturer and a retailing platform, in which the retailing platform procures products from the manufacturer. The manufacturer produces the products and decides the product quality. We consider two channel structures of the manufacturer and the retailing platform in the reseller mode and marketplace mode. Based on the model analysis and discussions, we obtain some managerial insights that are helpful in commercial practice. For the retailing platform, it has to suffer a loss in economic profit to care more about consumer surplus and become a social responsibility platform. In addition, its social responsibility plays different roles in different channel structures. In the marketplace mode, a social responsibility retailing platform helps to improve product quality. In the reseller mode, the retailing platform’s social responsibility does not make a change in product quality. Furthermore, the product quality in the reseller mode is always higher than that in the marketplace mode. From the perspective of economic profits, the manufacturer obtains higher profits in the reseller mode than the marketplace mode. The retailing platform obtains higher profits in the marketplace mode than the reseller mode.