Article Abstract
Motivated by the observation that some online retail platforms begin to enter offline channels by acquiring traditional retailers, this paper studies the impact of platform acquisition in a context where a manufacturer sells a product via an online agency selling and two offline reselling channels. Considering three changes brought by platform acquisition in practice, namely, showrooming, “pay online but pickup in store (POPS)” and pricing power transfer effects, we investigate how platform acquisition impacts the firms’ pricing behaviors and profits, customer surpluses, and social welfare. Our analysis shows that, although acquisition may hurt the upstream manufacturer and the non-acquired traditional retailer, it always makes the platform and the acquired traditional retailer better off as a whole. Further, it may benefit the total supply chain and improve consumer surpluses and social welfare. Interestingly, platform acquisition leads to a demand siphon force (shifting demand from the non-acquired channel to the two channels related to acquisition) when platform acquisition brings strong showrooming and POPS effects; otherwise, it leads to the opposite demand spillover force. Finally, regarding the decision on the acquisition fee, there exists a moderate range that enables the platform and offline retailer to achieve a win-win situation. These findings collectively provide some valuable insights for decision-makers to understand the impacts of platform acquisition in a competitive triple-channel supply chain.
European Journal of Operational Research, August 2025
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About the researcher
Lusheng Shao is Professor of Operations and Supply Chain Management at The University of Melbourne. He obtained a PhD in Business (Operations and Analytics) from The University of Sydney Business School. Professor Shao has held visiting positions at leading universities in the US (Washington University in St. Louis), the UK (University of Cambridge and University of Warwick), Singapore (Singapore Management University), and Hong Kong (HKUST). He is an academic fellow in Melbourne Business School's Centre for Business Analytics and the Faculty's Centre for Asian Business and Economics.
His research interests include competition in supply chains, contracts and incentives, and more recently, sustainable operations. Supported by multiple external and internal grants, Professor Shao's research has been published in top journals in his field, including Operations Research, Manufacturing & Service Operations Management, Production and Operations Management, and Decision Sciences.