Optimal channel and logistics service selection strategies in the e-commerce context

Abstract

• We study channel and logistics service selection strategies for offline firms. • Optimal strategy depends on annual service fee and logistics service cost. • Platform’s logistics fee is not always larger than that charged by third-party. • Entering the platform benefits consumers regardless of which logistics is adopted. • Consumer return behavior affects channel and logistics service strategies. In recent years, with the development of e-commerce, some e-commerce platforms have dominated the e-commerce market. Besides, both platforms and third-party logistics providers offer online logistics services, which affect consumer product purchase behavior. In this context, traditional offline firms face the challenges of whether to enter e-commerce platforms and which online logistics service to adopt. To address channel and logistics service selection decisions-making issues of these offline firms, our paper considers a market consisting of an offline firm, an e-commerce platform and a third-party logistics service provider, then develops three theoretical models, i.e., not entering the platform (Model NE), entering the platform and adopting the platform logistics (Model YP), entering the platform and adopting the third-party logistics (Model YT). The results imply that, the firm’s optimal channel and logistics service selection strategies are comprehensively affected by the annual service fee and the logistics cost time-sensitivity coefficient. Note that, the logistics cost time-sensitivity coefficient in this paper is equal to the logistics cost regarding delivery time multiplied by the delivery time, that is, shorter delivery time will bring more logistics cost. Moreover, the rise of labor costs, the outbreak of epidemics and natural disasters, etc., will lead to the increase of the logistics cost time-sensitivity coefficient. Specifically, if the annual service fee is relatively high, the firm should not enter the platform; otherwise, in the case of a relatively low (high) logistics cost time-sensitivity coefficient, the firm should enter the platform and adopt the logistics service of the platform (the third-party). From the perspective of consumers (maybe consider corporate social responsibility), the firm should enter the platform. In the extension, when considering consumer return behavior, we find that, as consumer’s online satisfaction increases, the firm shouldn’t necessarily enter the platform.