As consumers increasingly prefer online shopping, global online platforms continue to expand. Currently, manufacturers primarily adopt either the reselling or agency model for online sales through online platforms, selecting the appropriate channel based on their product characteristics. Existing research often assumes that demand is deterministic, suggesting that manufacturers’ channel selections are mainly influenced by commission rates and production costs. However, in reality, many products, especially newly launched products, face significant demand uncertainty, with potential market sizes exhibiting divergence, forming either a large or a small market. Therefore, our study explores manufacturers’ online channel selection strategies under demand uncertainty, modeling demand uncertainty using a binary distribution and analyzing its impact on wholesale pricing, order quantity, pricing, and channel selection strategies. The findings indicate that demand uncertainty prompts online platforms and manufacturers to adopt more cautious ordering and pricing decisions, potentially leading low-profit manufacturers to opt for the agency channel and high-profit manufacturers to choose the reselling channel.

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Online Channel Selection Under Demand Uncertainty

  • Yixian Liao,
  • Xin Chen

摘要

As consumers increasingly prefer online shopping, global online platforms continue to expand. Currently, manufacturers primarily adopt either the reselling or agency model for online sales through online platforms, selecting the appropriate channel based on their product characteristics. Existing research often assumes that demand is deterministic, suggesting that manufacturers’ channel selections are mainly influenced by commission rates and production costs. However, in reality, many products, especially newly launched products, face significant demand uncertainty, with potential market sizes exhibiting divergence, forming either a large or a small market. Therefore, our study explores manufacturers’ online channel selection strategies under demand uncertainty, modeling demand uncertainty using a binary distribution and analyzing its impact on wholesale pricing, order quantity, pricing, and channel selection strategies. The findings indicate that demand uncertainty prompts online platforms and manufacturers to adopt more cautious ordering and pricing decisions, potentially leading low-profit manufacturers to opt for the agency channel and high-profit manufacturers to choose the reselling channel.