Are Quality Improvement and Store Brand Introduction Always Effective Strategies Under the Online Platform Case?

ABSTRACT Recently, many platform operators (p‐operators) have introduced store brands (SBs), which brings sales competition with suppliers' national brands (NBs) sold through these p‐operators with reselling or agency‐selling agreement. Confronting the encroachments of p‐operators' SBs, many suppliers usually conduct quality improvement to maintain the high‐end brand reputation of their NBs. We utilize the analytical model to investigate the effectiveness of quality improvement and SB introduction strategies in an online platform supply chain. Results reveal that the supplier always benefits from conducting quality improvement irrespective of the p‐operator's SB introduction strategy. The p‐operator always benefits from introducing SB if the supplier conducts quality improvement under reselling case, whereas this result cannot always hold under agency‐selling case. Although SB introduction hurts the supplier's profit, conducting quality improvement could mitigate the negative effect of p‐operator's SB on the supplier's profit. Counterintuitively, SB introduction may not necessarily decrease the NB's demand when the supplier conducts quality improvement. We also find that the supplier and p‐operator have a chance to achieve Pareto optimality under agency‐selling case, and the increased commission rate or/and brands substitutability would enlarge the chance of achieving Pareto optimality.