How does quality influence online retail strategy? This research explores how quality differentiation impacts a manufacturer’s channel strategy when selling through both an offline retailer and an online platform. This is important as many businesses continue to adapt to e-commerce. The manufacturer can choose to distribute high- or low-quality products via agency or reselling channels, which is essential to personnel management and employment management. The study demonstrates that agency selling is optimal when the commission rate is low. Moreover, the manufacturer chooses to sell high-quality goods online if the cost difference between the two quality levels is low. Interestingly, as the quality difference increases, the manufacturer is more likely to offer high-quality goods online. However, the platform and the retailer cannot benefit from the manufacturer’s decisions simultaneously. The author studies multiple aspects of running a platform-based business. These findings offer insights for manufacturers, retailers, and online platforms in optimizing their channel strategies and product offerings. The research provides actionable recommendations for businesses seeking to maximize profitability and market share in an increasingly competitive environment, which also has major impacts on decisions of how to market.
Published in Managerial and Decision Economics, this research is pertinent to the journal's focus on economic theory and business applications. The study's examination of channel strategy and quality differentiation aligns with the journal's coverage of decision-making in business and commerce. This has an impact on personnel management.