Start Date
10-12-2017 12:00 AM
Description
We examine how a spillover effect of consumer awareness across different products affects a third-party seller’s product offering on a retail platform. We develop a game-theoretic model in which a third-party seller carries identical products as the retailer as well as exclusive products that the retailer does not carry. We find that the third party’s optimal selling strategies vary with its initial awareness, the extent of spillover effect, and the commission rate. For a low commission rate, when its initial awareness and spillover effect are mild, the third party sells both identical and exclusive products on the retailer’s platform; when its initial awareness is high or spillover effect is salient, the third party sells exclusive products only. For a high commission rate, the third party only sells identical products when the spillover effect relative to initial awareness is significant.
Recommended Citation
Song, Wen; Chen, Jianqing; and Li, Wenli, "Spillover Effect of Consumer Awareness on Third-Party Sellers’ Selling Strategies on Retail Platforms" (2017). ICIS 2017 Proceedings. 18.
https://aisel.aisnet.org/icis2017/Economics/Presentations/18
Spillover Effect of Consumer Awareness on Third-Party Sellers’ Selling Strategies on Retail Platforms
We examine how a spillover effect of consumer awareness across different products affects a third-party seller’s product offering on a retail platform. We develop a game-theoretic model in which a third-party seller carries identical products as the retailer as well as exclusive products that the retailer does not carry. We find that the third party’s optimal selling strategies vary with its initial awareness, the extent of spillover effect, and the commission rate. For a low commission rate, when its initial awareness and spillover effect are mild, the third party sells both identical and exclusive products on the retailer’s platform; when its initial awareness is high or spillover effect is salient, the third party sells exclusive products only. For a high commission rate, the third party only sells identical products when the spillover effect relative to initial awareness is significant.