Competition and Cooperation Mechanism Between Agency Selling and Wholesale: An Application of the Emerging E-commerce Model

Recently, the platform economy allows enterprises to collaborate with business partners and provide additional channels for various parties. E-commerce platforms have become integral channels for connecting suppliers with consumers. In the platform economy, agency selling and reselling are two predominant sales models that often coexist for the same product types, resulting in a competitive relationship. This study analyzes transaction data for 30,000 Stock Keeping Units (SKUs) provided by the Chinese e-commerce platforms over one month. We employ three models to compare the sales quantity and profits of manufacturers and online platforms and to identify the most efficient mode for stakeholders based on the model establishment and empirical evidence. Our findings suggest that apart from the existing channel to provide products to customers, manufacturers enter the platform which will increase the profit of platform operators. On the other hand, platform operators may also affect the profit of the manufacturers.