Store brand sourcing strategy for an online platform: should it always seek for a low-cost manufacturer?
研究了在线平台在推广自有品牌时，从高成本第三方制造商采购反而可能提高利润，但会损害消费者剩余，并分析了不同采购策略对制造商和品牌商的影响。
Sourcing is a critical decision for platforms seeking to promote store brands (SBs). In practice, these platforms primarily rely on two sourcing strategies: sourcing from the common contract manufacturer (CM) with a national brand manufacturer (NBM) or sourcing from a third-party manufacturer (TPM). The procurement cost emerges as a crucial determinant shaping the sourcing strategy, which has been overlooked in the existing literature. This study develops a game-theoretic model that incorporates procurement cost to analyse the optimal sourcing strategy. Our main findings are as follows. (i) The platform may achieve higher profits by sourcing from a TPM with high procurement costs due to the combined effects of mitigating double marginalisation and alleviating cannibalisation. However, this high-cost sourcing strategy hurts the consumer surplus. (ii) The CM always benefit from providing production services to the platform. However, compared with no SBs, the profitability of CMs can be improved when the platform introduces SB products from a TPM. (iii) Interesting, whether introducing the SBs hurts the NBM depends on the sourcing strategy and procurement costs. Introducing SBs and sourcing from the TPM may benefit the NBM. Furthermore, we also propose a side-payment contract to help players achieve Pareto improvement, reaching a “win–win–win” outcome.