Optimal Extended Warranty Strategy: Provided by Manufacturer or E-Commerce Platform?

Abstract

To meet the different needs of consumers in an E-commerce market environment, more and more enterprises have launched extended warranty services, which can reduce consumer risk and stimulate market demand in E-commerce supply chains. However, knowing who will launch the extended warranty services has become particularly important. To propose an optimal strategy of the extended warranty service provider and seller, three game models are constructed in an E-commerce supply chain consisting of a manufacturer and an E-commerce platform. In addition, this study investigated the effect of extended warranty strategy on consumers. The results show that when the extended warranty coverage and product failure probability are small, the extended warranty provided by the E-commerce platform can simulate the demand of products and extended warranty. The extended warranty provided by the manufacturer is the best choice for the manufacturer. On the other hand, the extended warranty provided by the E-commerce platform is always beneficial for the E-commerce platform and E-commerce supply chain system. The E-commerce platform should take some measures and control some parameters to make up for the losses of the manufacturer, so that the strategy of the extended warranty provided and sold by the E-commerce platform becomes the consistent choice of E-commerce supply-chain members, system, and consumers.