Self-supporting or third-party? The optimal delivery strategy selection decision for e-tailers under competition

Jing Yu · Zonghui Song · Chi Zhou

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Supply Chain and Inventory Management E-commerce and Technology Innovations Urban and Freight Transport Logistics

Abstract

Purpose With the vigorous development of the e-commerce delivery service industry, delivery service has become an important factor for e-tailers to obtain the market competitive advantage. However, how to choose the best delivery service strategy is a difficult problem for e-tailers in practice. The purpose of this paper is to investigate the effect of delivery service on e-tailers and online platforms. Design/methodology/approach Based on the Stackelberg game, the research study establishes and solves three models, namely dual self-supporting delivery service model, dual third-party delivery service model and differential delivery service model. Findings The results show that when the self-supporting and third-party delivery cost coefficients are all small, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a lower service fee. When the self-supporting and third-party delivery service fee are all low, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a smaller service cost. Both service fee and service cost determine the choice of e-tailers' delivery strategy. When the commission rate is moderate, both e-tailers are willing to choose the self-supporting delivery strategy, but the platform only prefers to provide self-supporting delivery to them with a lower delivery service sensitivity coefficient. Originality/value This paper analyzes the optimal delivery service strategies for e-tailers to compete with competitors, and explores the impacts of parameters for e-tailers and online platforms in their decision-making. The findings provide valuable implications for relevant practices.

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References

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