The Impact on Consumers of the Tabao-Merchant relationship during the Double 11 Promotion -using Game Theory Analysis

Abstract

This study examines the relationship between Taobao and merchants during the Double 11 shopping event, focusing on the distribution of profits between merchants and the platform and its impact on consumers. Based on primary and secondary research including questionnaires and interviews, this study shows that Taobao’s stronger bargaining position leads to conflicts between merchants and the platform. In particular, Taobao, because of its higher bargaining power, has gained greater benefits from dividing profits with merchants. Its control over factors such as commissions, advertising and traffic, etc., leads to a decrease in merchants’ profit margins, resulting in a greater impact on the price of goods than on the quality of goods. Although Double 11 boosts sales, this is detrimental to smaller merchants and reduces long-term satisfaction for both merchants and consumers.