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The optimal logistics service strategy choices between the platform and e-retailers

  • 1.

    School of Management, University of Science and Technology of China, Hefei 230026, China

  • 2.

    International Institute of Finance, University of Science and Technology of China, Hefei 230601, China

Cite this:
https://doi.org/10.52396/JUST-2021-0081
  • Received Date: 17 March 2021
  • Rev Recd Date: 21 April 2021
  • Publish Date: 30 April 2021
    Abstract

  • Abstract

    In the e-commerce market, the success of the hybrid online platform is well proven. The platform is not only an e-retailer but also provides online logistics services for other e-retailers in the platform. Logistics service is an indispensable link in e-commerce, and it also plays a vital role in promoting the online shopping. In our research, we analyze the impacts of logistics service sharing between the platform and the e-retailer and investigate the optimal strategy in two models. The study found that when the third-party logistics provider's logistics service level coordinates with logistics service fees and both are in the middle range, the platform and the e-retailer can achieve a logistics service sharing agreement, forming a win-win scenario. When the logistics service fee charged by the third-party logistics provider is too low, or the third-party logistics provider's logistics service is too high, both the platform and the e-retailer will choose the strategic mode of not sharing logistics service. Simultaneously, the third-party logistics provider's logistics service level promotes the logistics service level of the platform. Finally, numerical analysis is carried out to verify the equilibrium model and analyze the impacts of the equilibrium model's main parameters. Our study contributes to the growing body of research on the platform operation and provides management insights on firms' logistic service strategy choices.

    Abstract

    In the e-commerce market, the success of the hybrid online platform is well proven. The platform is not only an e-retailer but also provides online logistics services for other e-retailers in the platform. Logistics service is an indispensable link in e-commerce, and it also plays a vital role in promoting the online shopping. In our research, we analyze the impacts of logistics service sharing between the platform and the e-retailer and investigate the optimal strategy in two models. The study found that when the third-party logistics provider's logistics service level coordinates with logistics service fees and both are in the middle range, the platform and the e-retailer can achieve a logistics service sharing agreement, forming a win-win scenario. When the logistics service fee charged by the third-party logistics provider is too low, or the third-party logistics provider's logistics service is too high, both the platform and the e-retailer will choose the strategic mode of not sharing logistics service. Simultaneously, the third-party logistics provider's logistics service level promotes the logistics service level of the platform. Finally, numerical analysis is carried out to verify the equilibrium model and analyze the impacts of the equilibrium model's main parameters. Our study contributes to the growing body of research on the platform operation and provides management insights on firms' logistic service strategy choices.
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    • References(47)
  • [1]
    Gao B J, Chan W K, Chi L, et al. Size and growth dynamics of online stores: A case of China's Taobao.com. Electronic Commerce Research and Applications, 2016, 17(1): 161-172.
    [2]
    Asian S, Pool J K, Nazarpour A, et al. On the importance of service performance and customer satisfaction in third-party logistics selection. Benchmarking: An International Journal, 2019, 26(5): 1550-1564.
    [3]
    Amling A, Daugherty P J. Logistics and distribution innovation in China. International Journal of Physical Distribution & Logistics Management, 2018, 50(3): 323-332.
    [4]
    Zheng K, Zhang Z, Song B. E-commerce logistics distribution mode in big-data context: A case analysis of JD.COM. Industrial Marketing Management, 2020, 86(1): 154-162.
    [5]
    Hua W, Jing Z. An empirical study on e-commerce logistics service quality and customer satisfaction. WHICEB Proceeding, 2015, 16(3): 269-275.
    [6]
    Hu M, Fang H, Hou H, et al. Customized logistics service and online shoppers' satisfaction: An empirical study. Internet Research, 2016, 26 (2): 484-497.
    [7]
    Huang G. The relationship between customer satisfaction with logistics service quality and customer loyalty of China e-commerce market: A case of SF express. Journal of Rangsit Graduate Studies in Business and Social Sciences, 2019, 5(1): 120-137.
    [8]
    Sohn J I, Woo S H, Kim T W. Assessment of logistics service quality using the Kano model in a logistics-triadic relationship. The International Journal of Logistics Management, 2017, 28(2): 680-698.
    [9]
    Yu Y, Wang X, Zhong R Y, et al. E-commerce logistics in supply chain management. Industrial Management & Data Systems, 2017, 117(10): 2263-2286.
    [10]
    Wang P, Hao W J, Dong L Y. Comparative analysis of customer satisfaction of the self-operated logistics and third-party logistics of JD.com. E-Commerce Letters, 2018, 7(1): 1-9.
    [11]
    Sun L, Lyu G, Yu Y, et al. Fulfillment by Amazon versus fulfillment by seller: An interpretable risk-adjusted fulfillment model. Naval Research Logistics, 2020, 67(8): 627-645.
    [12]
    Zhu F, Liu Q. Competing with complementors: An empirical look at Amazon.com. Strategic Management Journal, 2018, 39(10): 2618-2642.
    [13]
    He P, Zhang S S, He C. Impacts of logistics resource sharing on B2C E-commerce companies and customers. Electronic Commerce Research and Applications, 2019, 34: 100820.
    [14]
    Rai R K. A co-opetition-based approach to value creation in interfirm alliances: Construction of a measure and examination of its psychometric properties. Journal of Management, 2016, 42(6): 1663-1699.
    [15]
    Yang Z B, Hu X, Gurnani H, et al. Multichannel distribution strategy: Selling to a competing buyer with limited supplier capacity. Management Science, 2018, 64(5): 2199-2218.
    [16]
    He Z, Huang D, He S G. Design of extended warranty service in a dual supply channel. Total Quality Management & Business Excellence, 2018, 29(9): 1089-1107.
    [17]
    Chen X, Luo Z, Wang X J. Compete or cooperate: Intensity, dynamics, and optimal strategies. Omega, 2019, 86(10): 76-86.
    [18]
    Peng T A, Bourne M. The coexistence of competition and cooperation between networks: Implications from two Taiwanese healthcare networks. British Journal of Management, 2009, 20(3): 377-400.
    [19]
    Ritala P. Coopetition strategy: When is it successful? Empirical evidence on innovation and market performance. British Journal of Management, 2012, 23(2): 307-324.
    [20]
    Gnyawali D R, Park B J R. Co-opetition between giants: Collaboration with competitors for technological innovation. Research Policy, 2011, 40(5): 650-663.
    [21]
    Wilhelm M. Managing coopetition through horizontal supply chain relations: Linking dyadic and network levels of analysis. Journal of Operations Management, 2011, 29(7-8): 663-676.
    [22]
    Kim J, Parkhe A. Competing and cooperating similarity in global strategic alliances: An exploratory examination. British Journal of Management, 2009, 20(3): 363-376.
    [23]
    Bello D C, Katsikeas C S, Robson M J. Does accommodating a self-serving partner in an international marketing alliance pay off? Journal of Marketing, 2010, 74(6): 77-93.
    [24]
    Luo X, Slotegraaf R J, Pan X. Cross-functional “coopetition”: The simultaneous role of cooperation and competition within firms. Journal of Marketing, 2006, 70(2): 67-80.
    [25]
    Abhishek V, Jerath K, Zhang Z. Agency selling or reselling? Channel structures in electronic retailing. Management Science, 2016, 62(8): 2259-2280.
    [26]
    Qing Q K, Deng T H, Wang H W. Capacity allocation under downstream competition and bargaining. European Journal of Operational Research, 2017, 261(1): 97-107.
    [27]
    Morath F, Munster J. Online shopping and platform design with ex ante registration requirements. Management Science, 2018, 64(1): 360-380.
    [28]
    Zhang T, Li G, Lai K K, et al. Information disclosure strategies for the intermediary and competitive sellers. European Journal of Operational Research, 2018, 271(3): 1156-1173.
    [29]
    Sahoo N, Dellarocas C, Srinivasan S. The impact of online product reviews on product returns. Information Systems Research, 2018, 29(3): 723-738.
    [30]
    Li X, Li Y, Cai X, et al. Service channel choice for supply chain: Who is better off by undertaking the service? Production and Operations Management, 2016, 25(3): 516-534.
    [31]
    Hong X P, Wang Z, Wang D, et al. Decision models of closed-loop supply chain with remanufacturing under hybrid dual-channel collection. The International Journal of Advanced Manufacturing Technology, 2013, 68(5-8): 1851-1865.
    [32]
    Zhan P, Xiong Y, Xiong Z, et al. Information sharing and service channel design in the presence of forecasting demand. Journal of the Operational Research Society, 2018, 69(12): 1920-1934.
    [33]
    Zhang S G, Dan B, Zhou M S. After-sale service deployment and information sharing in a supply chain under demand uncertainty. European Journal of Operational Research, 2019, 279(2): 351-363.
    [34]
    Niu B Z, Wang Y L, Guo P F. Equilibrium pricing sequence in a co-opetitive supply chain with the ODM as a downstream rival of its OEM. Omega, 2015, 57(5): 49-270.
    [35]
    Niu B Z, Xie F, Chen L, et al. Join logistics sharing alliance or not? Incentive analysis of competing E-commerce firms with promised-delivery-time. International Journal of Production Economics, 2020, 224: 107553.
    [36]
    Vickery S K, Koufteros X, Droge C. Does product platform strategy mediate the effects of supply chain integration on performance? A dynamic capabilities perspective. IEEE Transactions on Engineering Management, 2013, 60(4): 750-762.
    [37]
    Cennamo C, Santalo J. Platform competition: Strategic trade-offs in platform markets. Strategic Management Journal, 2013, 34(11): 1331-1350.
    [38]
    Kulyk P, Michalowska M, Kotylak S. Assessment of customer satisfaction with logistics service in the light of the results of the research. Management, 2017, 21(1): 205-222.
    [39]
    Chan A K, Chen C H, Zhao L. JD.com: Leveraging the edge of e-business. Emerald Emerging Markets Case Studies, 2018, 8(3): 1-30.
    [40]
    Pun H. The more the better? Optimal degree of supply-chain cooperation between competitors. Journal of the Operational Research Society, 2015, 66(12): 2092-2101.
    [41]
    Luo Z, Chen X, Wang X. The role of co-opetition in low carbon manufacturing. European Journal of Operational Research, 2016, 253(2): 392-403.
    [42]
    Wang Y, Niu B Z, Guo P. On the advantage of quantity leadership when outsourcing production to a competitive contract manufacturer. Production and Operations Management, 2013, 22(1): 104-119.
    [43]
    Chen L W, Gillbert S M, Xia Y S. Product line extensions and technology licensing with a strategic supplier. Production and Operations Management, 2016, 25(6): 1121-1146.
    [44]
    Bernstein F, Federgruen A. A general equilibrium model for industries with price and service competition. Operations Research, 2004, 52(6): 868-886.
    [45]
    Ding Y, Gao X, Huang C, et al. Service competition in an online duopoly market. Omega, 2018, 77(6): 58-72.
    [46]
    Tsay A, Agrawal N. Channel dynamics under price and service competition. Manufacturing & Service Operations Management, 2000, 2(4): 372-391.
    [47]
    Xia Y S, Xiao T J, Zhang G P. Service investment and channel structure decisions in competing supply chains. Service Science, 2019, 11(1): 57-74.
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    [1]
    Gao B J, Chan W K, Chi L, et al. Size and growth dynamics of online stores: A case of China's Taobao.com. Electronic Commerce Research and Applications, 2016, 17(1): 161-172.
    [2]
    Asian S, Pool J K, Nazarpour A, et al. On the importance of service performance and customer satisfaction in third-party logistics selection. Benchmarking: An International Journal, 2019, 26(5): 1550-1564.
    [3]
    Amling A, Daugherty P J. Logistics and distribution innovation in China. International Journal of Physical Distribution & Logistics Management, 2018, 50(3): 323-332.
    [4]
    Zheng K, Zhang Z, Song B. E-commerce logistics distribution mode in big-data context: A case analysis of JD.COM. Industrial Marketing Management, 2020, 86(1): 154-162.
    [5]
    Hua W, Jing Z. An empirical study on e-commerce logistics service quality and customer satisfaction. WHICEB Proceeding, 2015, 16(3): 269-275.
    [6]
    Hu M, Fang H, Hou H, et al. Customized logistics service and online shoppers' satisfaction: An empirical study. Internet Research, 2016, 26 (2): 484-497.
    [7]
    Huang G. The relationship between customer satisfaction with logistics service quality and customer loyalty of China e-commerce market: A case of SF express. Journal of Rangsit Graduate Studies in Business and Social Sciences, 2019, 5(1): 120-137.
    [8]
    Sohn J I, Woo S H, Kim T W. Assessment of logistics service quality using the Kano model in a logistics-triadic relationship. The International Journal of Logistics Management, 2017, 28(2): 680-698.
    [9]
    Yu Y, Wang X, Zhong R Y, et al. E-commerce logistics in supply chain management. Industrial Management & Data Systems, 2017, 117(10): 2263-2286.
    [10]
    Wang P, Hao W J, Dong L Y. Comparative analysis of customer satisfaction of the self-operated logistics and third-party logistics of JD.com. E-Commerce Letters, 2018, 7(1): 1-9.
    [11]
    Sun L, Lyu G, Yu Y, et al. Fulfillment by Amazon versus fulfillment by seller: An interpretable risk-adjusted fulfillment model. Naval Research Logistics, 2020, 67(8): 627-645.
    [12]
    Zhu F, Liu Q. Competing with complementors: An empirical look at Amazon.com. Strategic Management Journal, 2018, 39(10): 2618-2642.
    [13]
    He P, Zhang S S, He C. Impacts of logistics resource sharing on B2C E-commerce companies and customers. Electronic Commerce Research and Applications, 2019, 34: 100820.
    [14]
    Rai R K. A co-opetition-based approach to value creation in interfirm alliances: Construction of a measure and examination of its psychometric properties. Journal of Management, 2016, 42(6): 1663-1699.
    [15]
    Yang Z B, Hu X, Gurnani H, et al. Multichannel distribution strategy: Selling to a competing buyer with limited supplier capacity. Management Science, 2018, 64(5): 2199-2218.
    [16]
    He Z, Huang D, He S G. Design of extended warranty service in a dual supply channel. Total Quality Management & Business Excellence, 2018, 29(9): 1089-1107.
    [17]
    Chen X, Luo Z, Wang X J. Compete or cooperate: Intensity, dynamics, and optimal strategies. Omega, 2019, 86(10): 76-86.
    [18]
    Peng T A, Bourne M. The coexistence of competition and cooperation between networks: Implications from two Taiwanese healthcare networks. British Journal of Management, 2009, 20(3): 377-400.
    [19]
    Ritala P. Coopetition strategy: When is it successful? Empirical evidence on innovation and market performance. British Journal of Management, 2012, 23(2): 307-324.
    [20]
    Gnyawali D R, Park B J R. Co-opetition between giants: Collaboration with competitors for technological innovation. Research Policy, 2011, 40(5): 650-663.
    [21]
    Wilhelm M. Managing coopetition through horizontal supply chain relations: Linking dyadic and network levels of analysis. Journal of Operations Management, 2011, 29(7-8): 663-676.
    [22]
    Kim J, Parkhe A. Competing and cooperating similarity in global strategic alliances: An exploratory examination. British Journal of Management, 2009, 20(3): 363-376.
    [23]
    Bello D C, Katsikeas C S, Robson M J. Does accommodating a self-serving partner in an international marketing alliance pay off? Journal of Marketing, 2010, 74(6): 77-93.
    [24]
    Luo X, Slotegraaf R J, Pan X. Cross-functional “coopetition”: The simultaneous role of cooperation and competition within firms. Journal of Marketing, 2006, 70(2): 67-80.
    [25]
    Abhishek V, Jerath K, Zhang Z. Agency selling or reselling? Channel structures in electronic retailing. Management Science, 2016, 62(8): 2259-2280.
    [26]
    Qing Q K, Deng T H, Wang H W. Capacity allocation under downstream competition and bargaining. European Journal of Operational Research, 2017, 261(1): 97-107.
    [27]
    Morath F, Munster J. Online shopping and platform design with ex ante registration requirements. Management Science, 2018, 64(1): 360-380.
    [28]
    Zhang T, Li G, Lai K K, et al. Information disclosure strategies for the intermediary and competitive sellers. European Journal of Operational Research, 2018, 271(3): 1156-1173.
    [29]
    Sahoo N, Dellarocas C, Srinivasan S. The impact of online product reviews on product returns. Information Systems Research, 2018, 29(3): 723-738.
    [30]
    Li X, Li Y, Cai X, et al. Service channel choice for supply chain: Who is better off by undertaking the service? Production and Operations Management, 2016, 25(3): 516-534.
    [31]
    Hong X P, Wang Z, Wang D, et al. Decision models of closed-loop supply chain with remanufacturing under hybrid dual-channel collection. The International Journal of Advanced Manufacturing Technology, 2013, 68(5-8): 1851-1865.
    [32]
    Zhan P, Xiong Y, Xiong Z, et al. Information sharing and service channel design in the presence of forecasting demand. Journal of the Operational Research Society, 2018, 69(12): 1920-1934.
    [33]
    Zhang S G, Dan B, Zhou M S. After-sale service deployment and information sharing in a supply chain under demand uncertainty. European Journal of Operational Research, 2019, 279(2): 351-363.
    [34]
    Niu B Z, Wang Y L, Guo P F. Equilibrium pricing sequence in a co-opetitive supply chain with the ODM as a downstream rival of its OEM. Omega, 2015, 57(5): 49-270.
    [35]
    Niu B Z, Xie F, Chen L, et al. Join logistics sharing alliance or not? Incentive analysis of competing E-commerce firms with promised-delivery-time. International Journal of Production Economics, 2020, 224: 107553.
    [36]
    Vickery S K, Koufteros X, Droge C. Does product platform strategy mediate the effects of supply chain integration on performance? A dynamic capabilities perspective. IEEE Transactions on Engineering Management, 2013, 60(4): 750-762.
    [37]
    Cennamo C, Santalo J. Platform competition: Strategic trade-offs in platform markets. Strategic Management Journal, 2013, 34(11): 1331-1350.
    [38]
    Kulyk P, Michalowska M, Kotylak S. Assessment of customer satisfaction with logistics service in the light of the results of the research. Management, 2017, 21(1): 205-222.
    [39]
    Chan A K, Chen C H, Zhao L. JD.com: Leveraging the edge of e-business. Emerald Emerging Markets Case Studies, 2018, 8(3): 1-30.
    [40]
    Pun H. The more the better? Optimal degree of supply-chain cooperation between competitors. Journal of the Operational Research Society, 2015, 66(12): 2092-2101.
    [41]
    Luo Z, Chen X, Wang X. The role of co-opetition in low carbon manufacturing. European Journal of Operational Research, 2016, 253(2): 392-403.
    [42]
    Wang Y, Niu B Z, Guo P. On the advantage of quantity leadership when outsourcing production to a competitive contract manufacturer. Production and Operations Management, 2013, 22(1): 104-119.
    [43]
    Chen L W, Gillbert S M, Xia Y S. Product line extensions and technology licensing with a strategic supplier. Production and Operations Management, 2016, 25(6): 1121-1146.
    [44]
    Bernstein F, Federgruen A. A general equilibrium model for industries with price and service competition. Operations Research, 2004, 52(6): 868-886.
    [45]
    Ding Y, Gao X, Huang C, et al. Service competition in an online duopoly market. Omega, 2018, 77(6): 58-72.
    [46]
    Tsay A, Agrawal N. Channel dynamics under price and service competition. Manufacturing & Service Operations Management, 2000, 2(4): 372-391.
    [47]
    Xia Y S, Xiao T J, Zhang G P. Service investment and channel structure decisions in competing supply chains. Service Science, 2019, 11(1): 57-74.
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