Pricing and outsourcing strategies in different online sales models within a co-opetitive supply chain

Abstract

We examine a dual-tier supply chain where the brand entrusts its production to competitive and non-competitive manufacturers. We explore three online sales models used by the brand and manufacturers: traditional, pre-sale, and hybrid. Manufacturers serve the brand while competing with their own products. Considering consumer valuations across models, we create Stackelberg and Nash models. We analyze consumer valuation impact and the interplay of sales models and structural configurations on operational efficiency. We find that with competitive manufacturers' lower pricing, retailers tend to outsource to them. Retailers can choose sales models based on consumer evaluations, and higher dominance enhances profitability.