The impact of consumer data sharing on an e-tailer’s private label strategy

The rapid expansion of online marketplaces has given rise not only to private label (PL) introduction but also to an efficiency and security trade-off in sharing consumer data. This research constructs a supply chain model based on game theory that includes a manufacturer and an e-tailer. The model examines how the manufacturer distributes the national brand (NB) through either a reselling approach or an agency selling arrangement. The e-tailer invests in enhancing services to satisfy consumer demands and may introduce PL to compete with the NB. We acknowledge that although consumer data sharing can enhance service efficiency, it also poses privacy concerns. Thus, we investigate the conditions for sharing consumer data and its impact on the e-tailer’s PL strategy. Our analysis reveals several key insights. First, the e-tailer tends to introduce PL under conditions where consumer data sharing is limited, or when both the degree of data sharing and service efficiency are elevated. Meanwhile, increased data sharing diminishes the e-tailer’s motivation to introduce PL, with a preference for the agency selling mode over reselling mode. Second, we demonstrate that consumer data sharing benefits the e-tailer only when service efficiency is elevated, with a limited extent of data sharing being more advantageous. Additionally, the manufacturer consistently benefits when the e-tailer engages in data sharing. Third, our extended analysis indicates that a scenario beneficial to the e-tailer, manufacturer, consumers, and society at large arises when service efficiency is elevated and data sharing remains constrained.