Strategic channel decisions for the supplier and specialized e‐retailer in the presence of a third‐party marketplace

Abstract With the advancement of e‐commerce and the intensification of market competition, many suppliers have leveraged third‐party online marketplaces to expand their sales channels and bolster competitiveness. This poses potential threats to e‐retailers specializing in the core business of certain categories. This study examines a specialized e‐retailer's selling mode choice (reselling, in‐marketplace selling, or agency selling mode) and how this choice interacts with a supplier's channel strategy (marketplace, e‐retailer, or both/dual channels) in the presence of a third‐party marketplace. Our findings indicate that (1) the e‐retailer's optimal selling mode is contingent on the supplier's sales service quality and efficiency, and the e‐retailer's market occupation. Generally, when initially occupying a small market, the e‐retailer prefers selling in a third‐party marketplace, whereas when the initial market is relatively large, the e‐retailer is more inclined to opt for the reselling (agency selling) mode if the supplier's sales efficiency is low (high). Additionally, if the supplier's sales service quality is low, the e‐retailer will never choose the agency selling mode. (2) Exclusively introducing the marketplace channel is not the optimal choice for the supplier. Instead, adopting a dual channel is better when the direct selling cost is not too high. (3) Under certain scenarios, the supplier can manipulate the e‐retailer's channel by introducing the marketplace channel and offering a reference price without actually selling any products.