Switching or Adding : National Brand Seller's Sales Channel Design Coping with E-Marketplace's Brand Spillover Strategy

Many e-marketplaces use national brand sellers' contract manufacturers to produce their e-commerce brand products, and some of the e-marketplaces also advertise that their e-commerce brand products have the same contract manufacturers as excellent national brand products to take advantage of the excellent national brands' brand spillover. This work investigates how does the brand spillover affect the e-marketplace's and national brand seller's profitabilities and can the national brand seller cope with the e-marketplace's brand spillover strategy through adjusting sales channel: adding an official channel or switching the reselling channel to agency channel. Using game theory, we analyze the equilibrium outcomes in six scenarios characterized by the e-marketplace's different brand spillover strategies and the national brand seller's different sales channel designs. Our results show that the e-marketplace does not always benefit from using brand spillover, which depends on the two brands' substitution level, consumers' recognition of the e-commerce brand, the brand spillover level, and the national brand seller's sales channel design. Moreover, the national brand seller is best to add an official channel when the e-marketplace does not use brand spillover. However, adding the official channel not always is an effective response to prevent the e-marketplace using brand spillover. When the e-marketplace uses brand spillover, the national brand seller's optimal sales channel design also depends on the two brands' substitution level, consumers' recognition of the e-commerce brand and the brand spillover level