Platform Channel Selection and Demand Signal Sharing under Online Retail Competition

Abstract

This paper examines demand signal sharing and platform channel selection in a platform supply chain consisting of a platform retailer and a supplier with an online direct channel under demand uncertainty. By establishing Bayesian Stackelberg game models, we explore the incentive of demand signal sharing for the platform retailer with the supplier possessing demand signal from online direct channel under different platform channels, and further study platform channel selection of the supplier. Our findings show that whether the platform retailer would share the demand signal voluntarily or through a compensation contract depends on platform channel selection, commission rate of the agency channel, and channel competition intensity. With the optimal signal-sharing strategy, the supplier with an online direct channel chooses reselling and agency channels when the commission rate and channel competition intensity are not high. The platform retailer’s signal sharing promotes the supplier to choose reselling and agency channels. We also find that the supplier’s value of signal sharing decreases with channel competition intensity. As the platform retailer’s signal quality increases, and the signal quality of the supplier and the correlation coefficient of two demand signals decrease, the performance of the whole supply chain will increase under the platform retailer’s signal sharing strategy. These findings supplement the existing research on demand signal sharing in platform supply chains, offering insightful managerial implications for enterprises.

Keywords

Supply chain management / platform channel selection / demand signal sharing / online retail competition / Bayesian Stackelberg game

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