Alliance strategy in an online retailing supply chain: Motivation, choice, and equilibrium

• A co-opetitive online retailing supply chain is investigated. • The alliance motivation, choice and equilibrium are identified. • Win-win-win situations can be achieved if the manufacturer and the retailer/platform form an alliance. • Lose-lose-lose situations can be achieved if the retailer and the platform form an alliance. • A higher agency rate benefits the retailer when the manufacturer and the platform ally. In this paper, we investigate the alliance strategy in an Online Retailing Supply Chain (ORSC). Three alliance models in addition to one no alliance model are built and examined. The no alliance model as a benchmark is developed to characterize the alliance motivation for each supply chain member. Afterwards, we identify the optimal alliance strategy and the final alliance equilibrium. The results show that the manufacturer always has motivations to form an alliance with each of other two members, while the retailer and the platform may form an alliance only when the agency rate is relatively low. Moreover, under certain conditions, all supply chain members could achieve a win-win-win result in the manufacturer-retailer and manufacturer-platform alliance models, but fall into a lose-lose-lose situation in the retailer-platform alliance model. Additionally, it is interesting that a higher agency rate makes the retailer more profitable when the platform and manufacturer enter into an alliance. Finally, we find that each of the three alliance models may be the final equilibrium, which is largely dependent on channel competition and the agency rate.