Platform Selling VS. Wholesale Selling:Effect Of Demand Uncertainty And Competition

As a novel consumption pattern, E-commerce transaction has been attracting more and more customers and become an important way for retailers to develop. Therefore, many retailers offer platform for customers and third-parties or convert offline shop to online platform. These online retailers get profits through platform-selling mode or wholesale-selling mode. However, faced with competition of market and demand uncertainty, which selling modes should online retailers choose to obtain more profit and which selling modes would manufacturers prefer? To solve these problems, Stackelberg game theory and optimization theory are utilized to this paper. Through mathematical modeling and numerical simulation, we analyze online selling modes with competition of market and demand uncertainty. This paper includes two sections:In first section, we develop a profit model of platform-selling mode and wholesale-selling mode under additive uncertainty and study optimal selling strategies. This section analyzes the influence of competition, demand uncertainty, coefficient of sale efforts on platform-selling mode and wholesale-selling mode. The results show:(?) From the online retailer's perspective, when competition is small and coefficient of sale efforts is low, retailer prefers reselling products; When both of them are high, retailer prefers receiving commissions; (?) From the online manufacturers'perspective, they prefer wholesale-selling mode, but sometimes they prefer platform-selling mode; (?) The preference of retailer and manufacturers have nothing to do with demand uncertainty and only related to expected demand.In second section, we develop a profit model of platform-selling mode and wholesale-selling mode under multiplicative uncertainty and study optimal selling strategies. This section focuses on the influence of uncertainty on retailer and manufacturers. The results show:(?) the effect of competition and cost coefficient of sales effort under multiplicative demand is the same as the effect under additive demand, (?) However, uncertainty has different effects on preference of retailer or manufacturers. Under multiplicative demand, the optimal decision of retailer is from wholesale-selling mode to platform selling mode in uncertainty and the preference of manufacturer is from platform selling mode to wholesale-selling mode in uncertainty.