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Platform retailing with slotting allowance and revenue sharing

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  • Yuelin Shen

Abstract

This paper investigates a type of platform retailing, where the retailer builds up large facilities, inside which a supplier (manufacturer) rents a mini-store and sells goods directly. The retailer demands a slotting allowance and a portion of the sales revenue from the supplier; however, this fee structure may cause a channel conflict and supplier exclusion. To understand these phenomena, we build a two-supplier−one-retailer Stackelberg model with the retailer acting as the leader and the suppliers acting as the followers. We solve the model analytically and numerically, assuming competitive and non-competitive suppliers, identical and nonidentical slotting allowance, and possibly different revenue-sharing rates for the two suppliers. It is found that supplier exclusion may happen if the slotting allowance is identical across the suppliers, whereby the market size difference and product substitution are the underlying driving forces. We also provide rationales for the existence of a slotting fee.

Suggested Citation

  • Yuelin Shen, 2018. "Platform retailing with slotting allowance and revenue sharing," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(7), pages 1033-1045, July.
    • Handle: RePEc:taf:tjorxx:v:69:y:2018:i:7:p:1033-1045
    DOI: 10.1057/s41274-017-0286-4
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    Cited by:

    1. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Shopping in the omnichannel supply chain under price competition and product return," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    2. Ren, Da & Guo, Rui & Lan, Yanfei & Shang, Changjing, 2021. "Shareholding strategies for selling green products on online platforms in a two-echelon supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    3. Xu, Xiaoping & Zhang, Mian & He, Ping, 2020. "Coordination of a supply chain with online platform considering delivery time decision," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    4. Qiaoke Zhang & Hongzhuan Chen & Liangqi Wan, 2022. "Reselling or agency model under markdown pricing policy in the presence of strategic customers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2911-2923, October.
    5. Chunyu Li & Peng Xing & Yanting Li, 2022. "Sustainable Strategy Analysis: Platform Channel Configuration and Slotting Fee Design under Differentiated Quality Investment," Sustainability, MDPI, vol. 14(23), pages 1-28, December.

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