Profitable pathways: unraveling sales strategies and collusion impact in e-tailer-manufacturer supply chains

Abstract

Today, as market competition intensifies and competition costs rise, manufacturers are increasingly incentivized to engage in anti-competitive contracts or collusion, disrupting the market and harming non-colluding members; on top of all, the growing dominance of e-tailers further complicates supply chain relationships. While addressing the research gap in the specific dynamics between e-tailers and multiple manufacturers in the context of collusion and competition, the principal objective of this article is to get the best sales strategies and decision-making methods according to the standpoint of manufacturers, the e-tailer, and the entire supply chain. This study investigates the relationships and decisions of supply chain members, including an online retailer (e-tailer) and two manufacturers. Our findings indicate that fines for manufacturer collusion and higher e-tailer referral fees can reduce collusion incentives in reselling formats. When both manufacturers sell their products in a reselling sale format, the overall supply chain profit is appreciably higher in all cases, including centralized decision-making, Stackelberg-Bertrand competition, collusion, and deviation. Additionally, different sales formats increase collusion likelihood compared to identical formats, though reselling formats make collusion more sustainable. E-tailers should invest in high-intensity services to boost profitability, while manufacturers prioritize the agency sale format for optimal profits. The findings of this paper are significant as they provide practical guidance for supply chain management and help in monitoring commercial behavior to prevent collusion.