Information Sharing and Financing Services on Online Retailing Platforms

Abstract

Online marketplaces such as Amazon and Tmall have been expanding services to boost the growth of their ecosystems. One is information service on sharing privately gathered massive consumer data that is unavailable to their sellers, and the other is financing service, e.g., Amazon Lending and Ant Financial, aiming to provide accessible and affordable financial support for small and medium-sized sellers. This paper develops a game-theoretical model to examine the interplay between information sharing and financing services on a retail platform, particularly when sellers are financially constrained. The results show that while the information-sharing service always makes the platform less likely to provide an attractive financing service, the financing service also makes the information-sharing service less likely to be provided under certain conditions. These conditions depend on the structure of capital market and the seller’s initial working capital. We find that such misalignment between these two services can be resolved by charging a fixed payment for the information service, leading to improved operational efficiency and social welfare. We finally extend our analytical results and managerial insights to general settings, demonstrating the robustness of our findings. Our findings could provide useful guidance for platform practitioners in designing integrated information-sharing and financing services.