IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v178y2023ics1366554523002582.html
   My bibliography  Save this article

Does free brand spillover benefit online retailers? Roles of logistics service selection

Author

Listed:
  • Liu, Mengqi
  • Li, Guo
  • Wu, Huamin
  • Li, Xiaochuan

Abstract

Brand spillover is a pivotal tool that online retailers have adopted to market their new brand products, especially when competing against well-known product brands that prone to free-riding. This common practice seems beneficial to the adopters, but the motivation remains unclear in a supply chain setting. This study explores a co-opetitive supply chain in which a famous brand manufacturer (she) sells her own-branded products by commission via an online retailer (he) with a private label, who determines whether or not to utilize free brand spillover. The upstream manufacturer has to decide between two logistics service strategies, namely, Scenario T (i.e., using third-party logistics to serve the sales of their own-branded products) and Scenario R (i.e., employing the high-quality logistics of the online retailer). We explore the strategic interactions of the two firms and characterize their equilibrium. We reveal that when the decreased brand attractiveness of implementing third-party logistics is low, the brand manufacturer opts for the third-party logistics; otherwise, she embraces the high-quality logistics of the retailer. Interestingly, the brand manufacturer may be less inclined to utilize the logistics service of the retailer if he employs free brand spillover because it will help intensify market competition from the manufacturer’s perspective. Moreover, although free brand spillover enhances the attractiveness of the retailer’s private label without any cost, the retailer may not adopt it when the brand spillover intensity is low and the decreased brand attractiveness of the third-party logistics is moderate. Finally, we provide managerial insights and guidance for the firms’ managers on how to use the above strategies to obtain a “win–win” outcome. We also extend our analysis to the setting with imperfect substitutes, where the deterrence effect of brand spillover on the manufacturer’s logistics choice remains the same.

Suggested Citation

  • Liu, Mengqi & Li, Guo & Wu, Huamin & Li, Xiaochuan, 2023. "Does free brand spillover benefit online retailers? Roles of logistics service selection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 178(C).
  • Handle: RePEc:eee:transe:v:178:y:2023:i:c:s1366554523002582
    DOI: 10.1016/j.tre.2023.103270
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554523002582
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.tre.2023.103270?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hammami, Ramzi & Frein, Yannick & Albana, Abduh S., 2020. "Delivery time quotation and pricing in two-stage supply chains: Centralized decision-making with global and local managerial approaches," European Journal of Operational Research, Elsevier, vol. 286(1), pages 164-177.
    2. Zhen, Xueping & Xu, Shuangshuang & Li, Yongjian & Shi, Dan, 2022. "When and how should a retailer use third-party platform channels? The Impact of spillover effects," European Journal of Operational Research, Elsevier, vol. 301(2), pages 624-637.
    3. Qin, Xuelian & Liu, Zhixue & Tian, Lin, 2021. "The optimal combination between selling mode and logistics service strategy in an e-commerce market," European Journal of Operational Research, Elsevier, vol. 289(2), pages 639-651.
    4. Lim, Wei Shi & Tan, Soo Jiuan, 2010. "Outsourcing suppliers as downstream competitors: Biting the hand that feeds," European Journal of Operational Research, Elsevier, vol. 203(2), pages 360-369, June.
    5. Ruomeng Cui & Meng Li & Qiang Li, 2020. "Value of High-Quality Logistics: Evidence from a Clash Between SF Express and Alibaba," Management Science, INFORMS, vol. 66(9), pages 3879-3902, September.
    6. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    7. Lizhen Xu & Jason A. Duan & Andrew Whinston, 2014. "Path to Purchase: A Mutually Exciting Point Process Model for Online Advertising and Conversion," Management Science, INFORMS, vol. 60(6), pages 1392-1412, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Jin & Wang, Haoyu & Shi, Victor & Sun, Qi, 2024. "Manufacturer's choice of online selling format in a dual-channel supply chain with green products," European Journal of Operational Research, Elsevier, vol. 318(1), pages 131-142.
    2. Cao, Kaiying & Xu, Yuqiu & Hua, Ye & Choi, Tsan-Ming, 2023. "Supplier or co-optor: Optimal channel and logistics selection problems on retail platforms," European Journal of Operational Research, Elsevier, vol. 311(3), pages 971-988.
    3. Bian, Yiwen & Wang, Hang & Yan, Shuai & Han, Xiaohua, 2024. "Platform channel strategy of selling format: Effect of asymmetric service information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 185(C).
    4. Matsui, Kenji, 2024. "Should competing suppliers with dual-channel supply chains adopt agency selling in an e-commerce platform?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 587-604.
    5. Tan, Yinliang (Ricky) & Yu, Chuanbin & Liu, Yang & Zheng, Quan, 2024. "Agency models in online platforms: A review of recent developments and future prospects," European Journal of Operational Research, Elsevier, vol. 319(3), pages 679-695.
    6. Li, Jun & Shen, Wenjing & Liao, Yi & Cai, Gangshu & Chen, Xiangfeng, 2024. "The fulfillment service in online marketplaces," European Journal of Operational Research, Elsevier, vol. 315(3), pages 1139-1152.
    7. Li, Lin & Li, Guo, 2023. "Integrating logistics service or not? The role of platform entry strategy in an online marketplace," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    8. Zhang, Zhichao & Xu, Haiyan & Zhao, Yingxue & Liu, Zhi & Chen, Kebing, 2023. "Extended warranty service provision: A strategic analysis for the E-commerce platform supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    9. Wang, Kai & Lin, Jun & Liu, Guoquan & Liu, Qi, 2022. "Strategic introduction of logistics retail and finance under competition and channel spillover," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    10. Shi, Dan & Wang, Meiqi & Li, Xiang, 2021. "Strategic introduction of marketplace platform and its impacts on supply chain," International Journal of Production Economics, Elsevier, vol. 242(C).
    11. Wei, Jie & Chang, Meijing, 2023. "Are price matching and logistics service enhancement always effective strategies for improving profitability?," European Journal of Operational Research, Elsevier, vol. 307(1), pages 103-115.
    12. Zhai, Yue & Hua, Guowei & Cheng, Meng & Cheng, T.C.E., 2023. "Production lead-time hedging and order allocation in an MTO supply chain," European Journal of Operational Research, Elsevier, vol. 311(3), pages 887-905.
    13. He, Shan & Dai, Ying & Ma, Zu-Jun, 2023. "To offer or not to offer? The optimal value-insured strategy for crowdsourced delivery platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    14. Wu, Yaobin & Huang, Jiazhou & Chen, Xiangfeng, 2024. "The information value of logistics platforms in a freight matching market," European Journal of Operational Research, Elsevier, vol. 312(1), pages 227-239.
    15. Zhou, Xiaoyang & Liu, He & Li, Jialu & Zhang, Kai & Lev, Benjamin, 2023. "Channel strategies when digital platforms emerge: A systematic literature review," Omega, Elsevier, vol. 120(C).
    16. Cheng, Xianghui & Deng, Shiming & Jiang, Xuan & Li, Yanhai, 2023. "Optimal promotion strategies of online marketplaces," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1264-1278.
    17. Liu, Yang & Lu, Jizhou & Yan, Nina, 2024. "Agency or reselling? Supplier’s online channel strategies with platform financing," European Journal of Operational Research, Elsevier, vol. 318(3), pages 1014-1027.
    18. Wang, Wei & Feng, Lipan & Chen, Xiaoxu & Yang, Lei & Choi, Tsan-Ming, 2024. "Impacts of selling models: Who should offer trade-in programs in e-commerce supply chains?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 186(C).
    19. Hu, Shu & Fu, Ke, 2025. "Equilibrium analysis of the seller’s fulfillment channels and sales channels," European Journal of Operational Research, Elsevier, vol. 320(3), pages 544-558.
    20. Zhao, Qingli & Fan, Zhi-Ping & Sun, Minghe, 2024. "Sales mode selection and blockchain technology adoption decisions in a platform supply chain," International Journal of Production Economics, Elsevier, vol. 272(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:178:y:2023:i:c:s1366554523002582. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.