Logistics mode selection and information sharing in a cross-border e-commerce supply chain with competition

Abstract

Selecting an appropriate logistics mode is crucial for overseas suppliers (OSs) who enter new markets through the cross-border e-commerce platform (CEP), but it is challenging because OSs are unfamiliar with the local markets. Thus motivated, we aim at a supply chain where an OS sells its product through a CEP that holds demand information advantages, and the OS faces competition from the domestic supplier (DS). By constructing a multi-stage game model, we study the OS's logistics mode selection between direct-mail and bonded-warehouse, which has different logistics costs and inventory risks. Moreover, the influence of the CEP's information sharing decision on the logistics mode selection is investigated. Our results show that with information sharing, the OS always selects the bonded-warehouse logistics mode; while without information sharing, the OS makes a choice between direct-mail and bonded-warehouse mode according to the tax rate and market fluctuation. Particularly, under a high tax rate, with the increase in market fluctuation, the uninformed OS not only needs to adjust the logistics mode choice but also change the inventory strategy. We also reveal that information sharing could lead to the OS changing the logistics mode from direct-mail to bonded-warehouse, and then cause fierce competition between the OS and DS. Therefore, sharing information does not always benefit the CEP. Under certain conditions, it is more beneficial for the OS to choose the direct-mail mode when the information is shared, as doing so can help chain members escape the prisoner's dilemma and thus lead to a “win-win-win” outcome.