Promised-Delivery-Time-driven Reselling Decisions Confronting Platform’s Private Label Competition : Game Analysis and Data Validation

In e-commerce operations, many brands participate with platforms such as JD.com under the reselling mode because it is JD.com that undertakes the high-quality logistics service (e.g. quoting a short promised-delivery-time (PDT for short hereafter)) and consumers are generally more willing to pay a higher price for the products sold in JD.com’s retail channel. However, the brand’s reselling decision by platform participation may be challenged by the competition from the platform’s private label products. We therefore conduct a multi-methodological research by validating the brand’s reselling decision through an e-commerce platform using both game-theoretical analysis and big data analysis based on JD.com’s transaction-level dataset. We first show the value of platform reselling by utilizing the batch gradient descent algorithm, and then develop a game-theoretical model to formulate the impact of the platform’s private label competition. We find that echoing the data analysis results, the platform’s significant channel advantage and the high logistics service level encourage a brand to adopt the reselling mode rather than the direct-selling mode through its self-channel. Interestingly, the impact of brand competitiveness of the platform’s private label product is non-monotonic. The brand may prefer reselling through the platform only when the platform’s private label competitiveness is moderate, as the brand’s profit will be hurt by a small sales quantity /a low profit margin when the platform’s private label competitiveness is low/high. We further show that there exist win-win situations between the brand and the platform when the brand chooses the reselling mode