With the rapid development of e-commerce and the increasing competition among retailers, store brand strategy becomes the key to gain competitive advantage. In general, retailers sell store brand products and other manufacturers' products at the same time. In e-commerce, most retailers choose to provide manufacturers with a sales platform that allows them to sell their products directly to consumers and receive commissions. For example, Dangdang.com not only sells its own brand "DANGDANG BABY", also allows other manufacturers to sell maternal and child products on its platform. However, when retailers sell store brand products and other manufacturers' products, the similarities between products may result in competition due to the proximity of products. Thus, many retailers with store brands, such as Wal-Mart and Tesco, still adopt traditional reseller model. In this way, retailers have two different strategies:first, open the platform to allow other manufacturers to sell products on the platform; second, do not open the platform, retailers purchase products form the manufacturer and then sale to consumers. Therefore, the open platform strategy of store brand retailer is examined, and the question is mainly answered in this paper:should the store brand retailer open its platform?
Existing literatures on store brand mostly study the retailer's store brand strategy and manufacturer's preventive strategy, there is studies on the open platform strategy for the retailer with store brand. Moreover, few literatures of retailer platform openness strategy consider both the demand difference of store brand and manufacturer brand, price competition, fixed costs, and the endogenous commission rate. Thus, the key contribution of our study can be summarized as follows. The potential demand differences, competition degree and fixed costs are considered at same time. The platform open strategy of store brand retailers is studied, and some theoretical comclusions are proved by taking JD.com as a case.
The paper is organized as follows:the equilibrium profit of the retailer and the manufacturer under close platform and open platform is obtained by building a linear demand function model, and then the condition of commission rate endogenous is given. Moreover, the conditions of the retailer open platform are given by comparison the equilibrium profit, and the influence of the coefficient of price influence, the fixed cost and the demand difference coefficient of store brand and manufacturer brand is analyzed. Finally, combined with numerical analysis and the development status of JD's store brand, the main conclusions of this paper are verified.
The results show that, firstly, the commission rates gradually reduce with the increase in fixed costs or the decrease in the demand difference coefficient. Secondly, the retailer prefers to open platform when the price impact coefficient, or fixed cost, or the demand difference coefficient is small, and the retailer prefers to close platform when the price impact coefficient, or fixed cost, or the demand difference coefficient is bigger. Our findings not only complement the store brand and online marketplace literature but also provide testable empirical questions on the relationship and magnitude of different factors steering the strategy choice.
LI Pei, WEI Hang, WANG Guang-yong, TAN Dan
. Retailer's Platform Opening Strategy for Retailer with Store Brand[J]. Chinese Journal of Management Science, 2019
, 27(3)
: 105
-115
.
DOI: 10.16381/j.cnki.issn1003-207x.2019.03.011
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