Abstract: A study is conducted on the optimal strategy of supply chain under three markets composed of two competitive retailers. By considering online retailers making great efforts to sell self-operated products, both e-retailers' equilibrium strategies are found. It shows that agency selling weakens the negative effects of double marginalization from reselling and leads to lower retail prices. E-retailers prefer agency selling when the base demand of joint products is close to that of self-operated products. When the base demand of joint products is low or medium, online retailers can benefit from choosing reselling. Results indicate that, the selection of selling formats by e-retailers is mostly what the manufacture prefers. The market equilibrium structure conflicts with the manufacturer's preference equilibrium structure mainly because manufacturers have a free-riding behavior.