Sell on, sell to, or sell through: The sales performance implications of brand-platform selling arrangements

• Published in: Journal of retailing 2024-09
• Main Authors: Wang, Hao, Good, Valerie, Lim, Joon Ho, Hsieh, Ming-Huei
• Format: Article
• Language: English
• Subjects: Brand-aggregator platforms; Branding; E-commerce; E-retailing; Platform selling; Retailer sales; Supplier sales
• ISSN: 0022-4359
• DOI: 10.1016/j.jretai.2024.09.003

•Should brands sell products to (1P), on (3P), or through (2P) platforms?•2P is better than 1P for brands; no significant difference between 2P and 3P.•2P's benefits over 3P are stronger for brands with limited operational skills.•2P is more advantageous than 1P for highly innovative brands.•2P's benefits over 1P are smaller for premium brands and greater for budget ones. Despite the growing prevalence of online retail platforms, scant research has focused on how different selling arrangements affect brand sales performance on the platform. This study explores the sales performance implications of three brand–platform selling arrangements: 1P (a brand manufacturer sells to the platform for resale), 3P (a brand manufacturer sells on the platform), and 2P (a brand manufacturer sells through the platform using a hybrid model in which the platform handles all fulfillment). Utilizing a comprehensive dataset from a major U.S. brand-aggregator platform, encompassing 21,555 brand–category observations across 17 product categories, we examine the impact of these selling arrangements on brand sales performance on the platform. The findings reveal that 2P operations are generally associated with higher sales performance than 1P operations. We find no significant difference between 2P and 3P operations. The study also shows that the effectiveness of these arrangements is contingent on brand characteristics such as operational capabilities, innovativeness, and pricing strategies. This research contributes to understanding the nuanced interplay between platform selling arrangements and brand attributes, providing strategic insights for brand managers in the evolving online retail landscape.