Optimal Assortment and Pricing Decisions of a Physical Retailer Competing with Third-Party Sellers from Amazon Marketplace

摘要

Amazon is notorious for its zero dividend payout policy and its ambition to capture every growth opportunity, which may impose significant burdens on its short-term liquidity.Although the commission revenue from the third-party sellers appears important to Amazon, many third-party sellers have complained about the way Amazon has treated them.While EBay would transfer buyers’payments to a third-party seller in about 3 days, Amazon may hold those payments for 4-6 weeks.Amazon's sudden raise of commission rate in March 2017 has upset a significant portion of third-party sellers, and forced many of them to leave the Marketplace.These incidents reflect how Amazon has struggled to meet its short-term liquidity needs.In this paper, we intend to characterize in a game-theoretic model the optimal assortment and pricing decisions for a small physical retailer competing with third-party sellers from Amazon Marketplace, and to establish a connection between a physical retailer's chance of survivorship and Amazon's short-term liquidity.