Distribution mode choice and service effort decision in a platform supply chain with reputation spillover

Brand manufacturers are exploring new distribution modes by cooperating with platforms through reselling or agency mode, potentially impacting the retailer’s service effort. Platform reputation can either boost or harm the manufacturer’s brand reputation, complicating the distribution mode choice and service effort decision. To shed light on this issue, we develop game-theoretic models under three scenarios: traditional selling mode, dual channels with reselling mode, and dual channels with agency mode. We obtain several noteworthy findings. First, when the negative reputation spillover is significant, the traditional selling mode for the manufacturer is optimal, while the positive spillover consistently motivates dual-channel adoption. With moderate (low) negative spillover, the reselling (agency) mode is preferred for platform collaboration. The retailer provides the highest service effort under the dual channels with reselling mode. Despite benefiting from the service effort, the manufacturer can prefer agency mode. Additionally, a higher service cost hinders the manufacturer from choosing the dual channels with reselling mode. Counterintuitively, although the offline hassle cost enhances platform channel competitiveness, it reduces the likelihood of entering the platform. Conversely, the platform’s price subsidy enhances the manufacturer’s preference over agency mode. Finally, the manufacturer and the platform can achieve a win-win situation.