Platform channel strategy of selling format: Effect of asymmetric service information

In platform-based retailing settings, product related services, e.g., product promotion, consulting service, fast order fulfillment, logistics service and even gift wrapping, may be offered by the upstream supplier or the downstream online platform, depending on whether the platform is operating under the agency or reselling format. Such service information may be asymmetric, which highly affects how and whether the online platform chooses the selling format. A platform’s optimal strategies of selling format selection and information sharing with asymmetric service information are explored in this work. We show that whether the reselling or agency format is adopted highly depends on which player can offer a high-type service. Specifically, when the platform can offer a high-type service and the service level difference is sufficiently large, it will prefer the reselling format, but the agency format otherwise. It is found that the optimal selling format selection directly affects the selling player’s information sharing strategy in the supply chain. In particular, the platform will always choose to share the asymmetric service information when it adopts the reselling format, but the supplier does not always do so when adopting the agency format.