Leveraging the Social Fabric to Improve Rural E-Commerce Access

In the context of intelligent logistics powered by digital technology, this study addresses last-mile delivery challenges in rural areas of Indonesia and China. We develop a theoretical model to explore how digital solutions can reduce barriers to e-commerce participation in rural communities. Specifically, we examine how “stage stations,” integrated with existing social fabric and digital tools, can lower the cost of last-mile delivery. We evaluate two scenarios: a decentralized model where stage stations are managed by independent agents, and a centralized model similar to Alibaba’s Taobao Village concept. Our analysis reveals that when rural delivery costs are high, the decentralized model reduces participation barriers and increases both platform profitability and social welfare. However, the centralized model generally outperforms the decentralized approach due to its greater operational efficiency and pricing flexibility, which mitigates the issue of double marginalization. Recognizing that centralized models may not always be feasible across different countries, we propose a coordination mechanism to optimize the decentralized approach. Our findings indicate that this mechanism significantly enhances the decentralized model’s performance. These insights highlight the potential of e-commerce platforms to leverage digital infrastructure, stage stations, and social technologies in building a more inclusive smart logistics ecosystem for rural customers (This chapter is adapted from the previously published paper: “Zhang, Z., Garimella, A., & Fan, M. (2024). Leveraging the Social Fabric to Improve Rural E-Commerce Access. Production and Operations Management, 10591478231224974”).