Advances in Consumer Research
Issue 4 : 927-954
Original Article
Introducing Own Brand Products on E-Commerce Platforms with Transaction Costs and Consumer Preferences
 ,
1
Lecture, School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang, 212100, China; School of Management, Fudan University, Shanghai, 200433, China.
2
Lecture, School of Business Administration, Anhui University of Finance and Economics, Bengbu, 233030, China,
Abstract

The saturation of user growth on e-commerce platforms (EPs), coupled with the rise of new consumer segments and evolving purchasing preferences, has driven EPs to shift from pure intermediaries to brand owners by introducing their own brand (OB) products. However, the competition between OB and national brand (NB) products is complicated by differences in transaction costs and heterogeneous consumer preferences over product style. To investigate this complexity, we develop a game model that incorporates both horizontal and vertical product differentiation. We analyze three OB product introduction strategies—only horizontal difference, high-quality, and low-quality—and examine equilibrium outcomes under scenarios of symmetric and asymmetric transaction costs. Our results show that when competition is intense, any of the three strategies may be optimal depending on degree of horizontal difference and product preferences. In contrast, when competition is weak, the high- quality strategy becomes optimal. When competition is fierce, the dominant equilibrium strategy shifts from the only horizontal difference scenario to the low-quality one with horizontal differences increasing. However, the dominant equilibrium shifts in the opposite direction when product preference is high. Moreover, transaction cost differences do not consistently benefit EPs nor harm NB retailers; under certain conditions, both parties may experience profit losses. This study contributes to the literature by jointly considering transaction cost asymmetry and multidimensional consumer preferences in OB product strategies. It also identifies conditions under which OB and NB products can achieve win-win- win outcomes in terms of consumer surplus, total profit, and social welfare.

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