ABSTRACT Recent years have seen online retail platforms engage in empowerment to boost demand for both their own channels and those of third‐party sellers. Under such a context, this paper investigates the selling formats choice problem within a distribution channel where a manufacturer distributes products through both a platform and a third‐party reseller, who subsequently sells to consumers via the platform. Our study examines two hybrid selling modes that differ in the selling relationship between the manufacturer and the platform: a manufacturer–platform reselling format, in which the platform purchases products from the manufacturer and resells them to consumers, and a manufacturer–platform agency selling format, in which the manufacturer sells directly to consumers via the platform under a commission contract. In both modes, a third‐party reseller sells to consumers through the platform and pays a commission. This phenomenon cannot be fully explained by existing theory on traditional one‐to‐one e‐commerce supply chains. To address this gap, we develop a game‐theoretic model to analyze equilibrium selling formats choices, wholesale prices, empowerment levels, and sales quantity decisions. Furthermore, we derive several noteworthy findings. For instance, three firms prefer a manufacturer–platform agency selling format under a high commission rate and a moderate cost of empowerment. Conversely, three firms prefer a manufacturer–platform reselling format under a low commission rate and cost of empowerment. These findings stand in contrast to the cases where the absence of platforms empowerment or platforms only empower themselves. Moreover, under a manufacturer–platform reselling format, our results demonstrate that the platform would empower the third‐party reseller if and only if cost of empowerment is high. For a particular product category, our study offers valuable insights for managers grappling with selling formats choices in the presence of third‐party resellers when the platform exerts empowerment.
Zhao et al. (Mon,) studied this question.