Supplier encroachment strategies in a retail platform with strategic inventory holding behavior

Practice has witnessed that the retail platform usually withholds strategic inventory in the reselling channel to improve channel efficiency. This intensifies the channel competition, which is essential to supplier encroachment in the retail platform. Thus far, the existing literature leaves the influence of strategic inventory holding behavior on supplier encroachment in the retail platform supply chain unexplored. In this paper, we build a two-period dynamic model to explore the connection between supplier encroachment and the retail platform's strategic inventory withholding behavior. Results show that without encroachment, the retail platform's strategic inventory decisions hinge on the holding cost, with encroachment, the retail platform's strategic inventory decisions are moderated by the commission rate when the holding cost is intermediate. Moreover, the supplier's optimal encroachment strategies are jointly moderated by the commission rate and slotting fee. Importantly, the retail platform's strategic inventory withholding behavior mitigates supplier encroachment from a qualitative and quantitative perspective, and supplier encroachment narrows the region of the strategic inventory holding. Interestingly, supplier encroachment could bring all-win outcomes, however, low inventory holding cost induces a small region of all-win outcomes.