Strategic selling agreement and information management under leakage in an e-commerce supply chain

Nowadays, numerous manufacturers sell products through both an online e-tailer and an offline retailer. The e-tailer can use its rich sales data to predict the demand information and thus has the information advantage. This study develops a game-theoretic model to study the e-tailer’s selling agreement selection and information sharing policy in this multi-channel supply chain. The reselling agreement is adopted by offline retailer, while the reselling or the agency selling agreement can be prepared by the online e-tailer. Our analysis shows that the e-tailer’s information sharing strategy are quite different under these two agreements. That is, the e-tailer has an incentive to share information with the manufacturer voluntarily in the agency selling agreement whereas sharing information hurts the e-tailer in the reselling agreement. Interestingly, under an agency selling agreement, information sharing can make the manufacturer, the offline retailer, and the e-tailer becomes better than the non-information sharing scenario (i.e., Pareto-improvement). However, the reselling e-tailer only shares information with the manufacturer by virtue of information sharing contracting and the all-win outcomes are achieved if the demand uncertainty is high and the competition between the e-tailer and retailer is moderate. Furthermore, the interaction between the large commission rate and the less demand uncertainty drive the e-tailer to adopt the agency selling agreement; otherwise, the reselling agreement is the best choice for the e-tailer. Finally, we demonstrate that, when the e-tailer shares information with the manufacturer, the competing offline retailer always becomes better off due to the information leakage effect. •This paper explores the impact of information forecast cost on information sharing policy.•Under a reselling agreement, information sharing is not always detrimental for the e-tailer.•The competitive offline retailer may always be better off due to the information leakage effect.•The selling agreement selection is not only concerned with the size of the commission rate, but also the degree of demand uncertainty.