Costly matching problem and revenue-maximizing strategy in the platform economy

In an e-commerce marketplace, the purchasing decision of each consumer is influenced by a number of factors, including (a) their profile, (b) product pricing, (c) minimum price-quantity pair offered, (d) decision space, (e) network offers, and (f) motive of the consumer. All of the above factors are rolled into a coherent concept that serves as the domain of the choice problem. The matching problem occurs when the consumer-requested domain does not match the domain the platform offers in terms of quantity, quality, and object types. When confronted with such issues, consumers may either unwillingly accept the platform’s offered domain or seek an alternative domain or platform that meets their needs. In this paper, we focus on the customized commodities available through e-commerce in terms of quantity and pack size and investigate the factors contributing to the matching problem between a consumer’s requested commodities list and the platform’s given list. We show that the platform can maximize its revenue due to mismatch and retain its customers by understanding the customer’s demand fluctuations. Finally, we discuss the criteria for the consumer to switch from one domain to another.