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The interplay between logistics strategy and platform’s channel structure design in B2C platform market

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  • Liu, He
  • Xu, Tianting
  • Jing, Shuai
  • Liu, Zhidong
  • Wang, Shouyang

Abstract

B2C platforms choose different channel choices and logistics strategies and many platforms changed their channel structures after building platforms’ self-supporting logistics. With the platform’s logistics, some manufacturers adopt the platform’s logistics while others do not. In this paper, we develop a game-theoretic model consisting of a platform, a manufacturer, and consumers to investigate the interplay between the logistics strategy and the platform’s channel choice. In the first stage, the platform decides whether to build its self-supporting logistics and its optimal logistics level. In the second stage, the platform chooses among the marketplace channel, the reselling channel and the hybrid channel. In the third stage, the manufacturer chooses whether to adopt the platform’s logistics if its store exists in the market (under the marketplace or hybrid channel). In the fourth and fifth stages, the manufacturer and the platform make pricing strategies. The results indicate the interplay between the two types of strategies. First, when the platform logistics level is much higher than the third-party logistics, the platform’s optimal channel choice is to operate the hybrid channel. Second, the platform’s channel choice affects the manufacturer’s logistics provider. When the platform logistics level is slightly higher than the third-party logistics level, the manufacturer chooses to adopt the platform’s logistics under the marketplace channel and not adopt it under the hybrid channel. We also find that the platform chooses to build its self-supporting logistics when the third-party logistics level is in the low or medium ranges.

Suggested Citation

  • Liu, He & Xu, Tianting & Jing, Shuai & Liu, Zhidong & Wang, Shouyang, 2023. "The interplay between logistics strategy and platform’s channel structure design in B2C platform market," European Journal of Operational Research, Elsevier, vol. 310(2), pages 812-833.
    • Handle: RePEc:eee:ejores:v:310:y:2023:i:2:p:812-833
    DOI: 10.1016/j.ejor.2023.02.043
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