Study On The Interaction Between Reselling And Agency Selling And The Influence Of Their Product Market Entry In The Platform

Recently more and more online retail platform firms choose open platforms to introduce agency sellers in order to occupy a dominant position in the online retail market.In such a platform the platform owner acting as the reseller purchases products from manufactures and sells them to consumers.The introduced agency sellers can also provide goods directly to consumers on the platform but they need to pay a certain commission to the platform.This kind of operation mode that combines the internal reselling and the external agency selling is called hybrid operation mode.For the platform owner with the help of huge online traffic and user base it attracts a large number of agency sellers to settle in which greatly enriches the diversity of products brings more purchase options for consumers and thus helps the platform to increase the demand pool.Therefore hybrid mode is the inevitable choice for online retail platforms to expand market scale obtain user resources and seize the competitive advantage.However,it is still unknown how to introduce agency sellers that is from the perspective of market structure introduce agency sellers with higher quantity or quality and what kind of relationship they will have with the reseller after entering the platform.Therefore,the platform owner may choose different strategies when opening the platform and managing agency selling market trying to explore a more favorable mode for the long-term development of the overall platform.For agency sellers on the one hand they rely on the resources of the platform and benefit from its accumulated user base.On the other hand in the niche product market they focus on the sales revenue and profit margin are not high while in the popular product market they will face the fierce competition from reselling.Some agency sellers may choose to exit the platform due to the squeeze from reselling or unable to adapt to thepace of platform development.In fact,with the continuous development of the platform the reseller and the agency sellers will adjust the product strategy according to the market demand after the stable operation of their existing product markets and selectively entry into each other's market to create more benefits.No matter what direction of the market entries this kind of competitive product strategy will make both sides form direct confrontation in the operation of some products.In this context how the platform reseller effectively manages the agency sellers and how these agency sellers can gain a foothold in the platform has become the focus of both academic and practical circles.Based on practical observations and combined with the theories of two-sided market long tail market concentration inter-organization relationship co-opetition and market entry theory this paper deeply discusses how reselling and agency selling interact in the hybrid platform as well as the role of market structure and product entry strategy in the relationship between the two parties.Firstly,based on the research questions this paper clarifies the importance and necessity of this study according to theoretical review and literature review and proposes the overall research framework and specific research design.Secondly three specific studies were carried out with appropriate empirical analysis methods.First the panel vector autoregression model(PVAR)was used to study the interaction between reselling and agency selling and the moderating effect of the market structure.Second,propensity score matching(PSM)and dual difference model(DID)were used to explore the mechanism of the agency sellers' entry into the reselling product market.Third PSM and DID were also used to inversely discuss the mechanism of the reseller's entry into the product markets of agency selling.Finally sorted out and summarized the research conclusions pointed out the theoretical contribution practical enlightenment and shortcomings of this paper and prospected the directions of future research.The main findings of this paper are as follows:(1)The interaction between reselling and agency selling and the moderating effect of the market structure of agency selling.First agency selling has a significant positive impact on reselling that is the increase of the sales of the agency sellers will significantly lead to the increase of the reselling sales.On the contrary reselling has a significant negative impact on agency selling which means that the increase of reselling sales will in turn lead to the decrease of the agency selling sales.Secondly the number of agency sellers will strengthen the positive effect of agency selling on reselling but has no significant moderating effect on the negative effect of reselling on agency selling.Finally,market concentration of agency selling weaken the positive effect of agency selling on reselling while strengthen the negative effect of reselling on agency selling.(2)Study on the mechanism of agency selling's entry into reselling product market.First agency sellers will choose products with low average price high sales volume low return rate high product exposure large number of suppliers and a large number of products in their product group to enter the market.Second agency selling's entry will form a direct competition relationship with reselling and will cannibalize reselling's sales.The reseller takes measures to raise prices after being affected by the entry of agency selling.In total the entry of agency selling into product markets of reselling will result in the decrease in the total sales on the platform.Then large agency sellers' entry will strengthen the negative effect of agency selling on sales of reselling while it will weaken the positive effect of agency selling on product prices of reselling.The entry of brand franchises into the reselling market will prompt the reseller to further raise product prices in response to the entry threat.Finally,the entry of agency sellers will increase their sales revenue and the number of products sold will also increase which means that these sellers provide both the original and new product markets.Additionally,agency sellers attract more consumers after entering the product markets of reselling which creates a foundation for further improvement of sales volume.(3)Study on the mechanism of reselling's entry into agency selling product market.First of all,the reseller is more willing to enter the product markets with high average price high sales volume high product exposure a large number of suppliers and a large number of products in the product group which is opposite to the choice of agency sellers in product price.Second the reseller's entry into markets of agency selling will lead to direct competition between the two parties and cannibalize the sales of the third party which means that as long as the entry of the other market it will form a situation of mutual cannibalization.Faced with the entry of reselling agency sellers will also take price raising strategy.However,the background mechanism is different.At the same time reselling' entry into product markets of agency selling will lead to the increase of the total sales revenue of the product on the platform which is opposite to the negative influence brought by the agency selling entering the reselling market.Then reselling's entry into the product markets of large sellers will increase the negative impact on agency sellers' sales revenue.Meanwhile the reselling entering the product markets of large agency sellers urges them further raise the price of products.However,brand franchises do not play a significant moderating role in reselling's entry into product markets of agency selling.Finally affected agency sellers by reselling entry are not significantly influenced in terms of sales revenue but they reduced the variety of products they offered.There also exist a significant decrease in the number of affected agency sellers' user base.Compared with the results of the entry of agency selling on reselling agency sellers' entry into the product markets of reselling can help themselves improve the sales revenue enrich the product varieties and own more user bases.However,when faced with the threat of the reselling's entry although it has no significant effect on sales but affected agency sellers will reduce the product categories provided on the platform and lose some user resources.The innovative points of this paper include:(1)This paper introduces the two perspectives of relatively stable market structure and dynamic product competitioin and finds that the interaction between reselling and agency selling in the hybrid retail platform will change in different situations.Through the research on the interaction between reselling and agency selling it is concluded that the hybrid operation mode is beneficial to the platform while the market structure of agency selling will moderate the development and trend of this mode.The dynamic perspective of product competition discusses the competition between the agency sellers' entry into the reseller's product markets and the reseller's entry into agency sellers' product markets.The discussion of the hybrid operation mode is an important step for the exploration of the platform operation mode in the field of practice and theory.(2)Based on the two-sided market theory this paper points out that there are different types of sellers on the supplier side extending the two-sided market to the multi-sided market.Early studies on two-sided market have focused on the relationship between supply side and demand side and consider that the sellers on the supply side are indistinguishable and basically use mathematical modeling to explore.However,in fact the hybrid retail platform studied in this paper not only has the characteristics of a typical two-sided market but also can distinguish different types of sellers due to the characteristics of the hybrid mode itself.Based on the theoretical framework of two-sided market this paper makes an in-depth empirical analysis of the interaction between different types of sellers in the retail platform and elaborates and expands the research on two-sided market and retail platform.(3)This paper applies the classic long-tail theory market concentration theory inter-organizational relationship and co-opetition theory and market entry theory to the emerging online retail field.It clarifies the internal mechanism of the two-way interaction between reselling and agency selling by combining the characteristics of online platforms.This paper is based on the long-tail coexist with the market concentration of online retail platform background through the empirical analysis found that reselling and agency selling has a co-opetitive relationship and the product market entry is not always by the strong side unidirectionally into the weak side.This not only to confirm again in the basic conclusions in the traditional market but also reveals the certain differences produced by online platform features.It is extremely beneficial to the extension of traditional theories.