Logistics choices in a platform supply chain: A co-opetitive perspective

Abstract

With the popularity and development of the platform economy, numerous enterprises are choosing to cooperate with e-commerce platforms to expand online market, and the cooperation modes have exhibited innovation and diversification. This paper focuses on a new platform-based co-opetitive supply chain whereby a flagship store operated by the manufacturer (MFS) and a self-run store operated by the platform (PSS) coexist in the platform market. The manufacturer acts as the platform’s upstream contract manufacturer and downstream competitor. We answer a key question that the manufacturers are facing: when should they adopt the high-level logistics service (HLS) provided by the platform? Two cases with exogenous and endogenous HLS charge are analyzed respectively. Our results show that under the case of exogenous HLS charge, the manufacturer should always select HLS when the HLS charge is low. Counterintuitively, if the product’s market potential is limited, the HLS is still profitable for the manufacturer despite a high HLS charge. When the HLS charge is endogenous, we find that the platform can adjust the HLS charge to induce the manufacturers to give up low-level logistics service (LLS) and choose HLS, which will achieve a win-win situation.