Considering the Sales Method and Logistics Service Strategy, Which Operating Mode Is the Best under Different Power Structures?

Abstract

When merchants enter hybrid e-commerce platforms (such as JD.com and Amazon), they will face issues such as which sales methods to choose and whether to use platform logistics under different power structures. Different sales methods and logistics service strategies have resulted in three operating modes: (a) resale mode, marked as A, (b) agency + no-platform logistics, marked as B, and (c) agency + platform logistics, marked as C. This paper constructs an analysis framework composed of an e-commerce platform and a merchant to explore the optimal operating mode. The game models of the three modes are first constructed, and then, the equilibrium results are compared and analysed. Based on the results of comparative analysis and considering the dynamic game between the e-commerce platform and the merchant regarding sales methods and logistics service strategies, the optimal operating mode is determined. The results show that when the platform has absolute power, mode C is optimal for it. When the logistics service sensitivity coefficient and market size are both large, the best for the merchant with absolute power is mode B. In addition, if neither of them has absolute power, only when the merchant first decides the logistics service strategy, then the platform decides the sales method; the best for both parties is mode B; otherwise, the best is mode A. This research has generated new insights and has practical management significance, which can provide guidance for merchant and platform decision-making.