Agency Selling Format With Spillover Effect

Seeing their massive consumer base,suppliers are increasingly cooperate with ecommerce platforms to sell goods or make promotions.Collaborations in this case usually take the form of “agency selling”,that is,platforms(agency)provide service and deduct part of sales revenue as commissions,while suppliers retain the decision-making power.It also brings about new challenges given that this new channel through agency affects sales in traditional channels.This thesis aims to guide decisions under an agency selling model with cross-channel spillovers and demand uncertainty.We find that firms’ decisions and the impact of spillovers are closely related to product types.For products fitting different(multiplicative or additive)demand model,the supplier’s optimum decisions have different expressions but the same structure: the optimal pricing strategy is to charge a premium over the base price,while the optimal stocking is decided by the classical fractile rule.The agency’s decision is rather simple in multiplicative case,affected only by the elasticity index.As for the spillover effects,when the positive(negative)effect strengthens,the optimal price declines(rises),while the optimal quantity increases(decreases),the impact of product type manifests itself mainly in the movements of stocking factor.If the commission rate is taken as exogenous,for products matching multiplicative(additive)demand format,the optimal stocking factor decreases(increases)with the spillover parameter.Once the commission rate is endogenous,the trajectory of stocking factor is no longer monotonic for additive-demand products,because the commission rate is also influenced by the spillover effects now;whereas the movement of stocking factor remain unchanged for multiplicative-demand products.