The interplay between marketplace channel addition and pricing strategy in an e-commerce supply chain

Abstract

E-commerce platforms are increasingly adopting a dual-format model. In addition to the reselling channel, these platforms may provide the marketplace channel for manufacturers or resellers. This study investigates the marketplace channel addition and pricing strategy in an e-commerce supply chain (ECSC) comprising one e-commerce platform, one manufacturer, and one reseller. We examine three marketplace channel addition scenarios defined by whether the manufacturer, reseller or both can sell products through the marketplace channel. The ECSC members may choose a differential pricing (DP) or a uniform pricing (UP) strategy in different scenarios. The results show that the platform is always willing to add a marketplace channel for the reseller under the DP strategy, while the manufacturer prefers to enter the marketplace alone. In contrast, under the UP strategy, if the commission rate is low and the channel competition intensity is high, the manufacturer chooses to introduce the marketplace channel separately to achieve a win-win situation with the platform. When considering both marketplace channel addition and pricing strategy, the manufacturer's and the platform's best choices are different. We also find that the manufacturer's participation in the UP strategy or delay in the retail price decision may reduce conflicts with the platform.