Can Different Quality Products Stop Retailers from Invading Store Brands?

Due to the rapid development of e-commerce platforms, many manufacturers have opened direct sales channels to sell their products directly to consumers (National Brand products). Manufacturers have resale and direct sales channels with retailers respectively. At the same time, retailers can expand their business by introducing their own branded products (Store Brand products) to expand their interests. This paper takes the supply chain formed by manufacturers and retailers as the object of study, and establishes a game model to explore the strategic interaction between retailers’ private label invasion and manufacturers’ selling different products in dual channels. The results of the study are as follows: on the one hand, the retailer’s intrusion cannot prevent the manufacturer from adopting a vertical product differentiation strategy; on the other hand, the manufacturer’s vertical differentiation strategy can prevent the retailer’s intrusion to a certain extent. Therefore, retailers may not be able to realise the optimal situation. Overall, the findings and managerial insights in this paper can help manufacturers with multi-channel, multi-products to optimise their product and channel strategies.