Expansion strategies of retail service sharing platform operations with service quality considerations

Sharing platforms enable renters to access products temporarily, even if they do not own them. In consumer-to-consumer sharing platforms (C2C-SP), like Tulerie, lenders share their products with the renters, while business-to-consumer sharing platforms (B2C-SP), like Rotaro, provide their own products for rental. Recently, some C2C-SPs have expanded into B2C by offering their own products, becoming a hybrid platform (e.g., My Wardrobe HQ). However, B2C-SPs do not usually expand their services into the C2C domain. By analytically exploring the expansion decision, this paper counters the conventional belief favourably inclined toward expansion. This paper analyses the interacting influence of factors such as product acceptance, costs of maintaining C2C service quality, and commission fee charged by the platforms on the expansion decisions of both B2C and C2C-SPs. Our paper identifies counterintuitive expansion decisions of the platform by their connect with the parameters. For higher acceptance of lender-owned products, C2C-SPs expand by offering their own products when service quality improvement cost is high. Interestingly, expanding to a hybrid sharing platform leads to a decline in the service quality of C2C services offered. Additionally, whenever C2C-SPs expand, even while offering a better lender-owned product, they further improve the service quality of the C2C market to maintain share of the market, with the cost of service quality not being too high. We extend our analysis to capture the implications of different service fee designs, lenders’ willingness to offer products at market price, and different cost structures in C2C sharing. Managerial implications and future research are discussed.