Implications of retail media network in an online platform with co-opetitive sellers

Retail media networks (RMNs) of online retail platforms are revolutionising e-commerce by monetising sellers' search rankings and reshaping co-opetition among online resellers. Yet the influence of RMNs on the relationships and strategic selling decisions of co-opetitive sellers remains underexplored. This study examines an e-commerce setting comprising an online platform, an upstream manufacturer (brand), and a reseller, where the platform determines whether to establish RMN and the manufacturer and reseller operate within a co-opetitive structure. We analyse two distinct selling modes–the reselling mode and the agency mode–to illuminate how RMN impacts selling strategies. First, the platform's decision to establish RMN hinges highly on the selling mode structures and market conditions. Under the reselling mode, the platform cannot always benefit from RMN. Second, based on the rational expectations of RMN establishment strategy, the equilibrium selling mode is jointly impacted by market conditions and selling mode selection power. Both the platform and the manufacturer have a common preference in the agency mode when commission rate is moderate. Third, RMN alters the preferences of the platform and the manufacturer, making the platform more likely to choose the agency mode, but making the manufacturer more likely to choose the reselling mode. When the platform chooses the selling mode, this impact is always beneficial for both the platform and the manufacturer. However, when the manufacturer chooses the selling mode, this impact may lead the platform and the manufacturer into a Stackelberg prisoner's dilemma, resulting in profit losses for both parties.