How Third‐Party Sellers Respond to Platform Owner Entry: Reselling Versus Private‐Label Modes in E‐Commerce

ABSTRACT

E‐commerce platforms depend on a large base of third‐party sellers, yet platform owners increasingly enter the product markets of those sellers, competing with them while retaining control over the search rankings and recommendation systems that shape which products buyers encounter. Prior research on this phenomenon has produced mixed findings and has largely focused on innovation platforms (e.g., app stores and software ecosystems), leaving e‐commerce marketplaces comparatively underexplored. This study examines how third‐party sellers respond to two distinct modes of platform owner entry—reselling, in which the owner begins selling an existing product on the same product listing, and private‐label entry, in which the owner introduces a separately listed substitute whose exposure is also shaped by platform‐controlled search and recommendations. Using longitudinal data from Amazon.com and discontinuous growth modelling, we find that sellers immediately reduce prices following reselling entry but increase prices following private‐label entry. Over the longer term, both entry modes attenuate the trajectories of seller participation and investment in FBA relative to their pre‐entry trajectories, with stronger attenuation following private‐label entry. These findings extend research on platform owner entry by showing that third‐party seller responses vary systematically across entry modes, moving beyond treatments of owner entry as a single competitive event. They also develop a visibility‐based explanation for why seller responses differ across entry modes and show that pricing, participation and platform‐specific investment may unfold over different time horizons following platform owner entry.