Sales model and logistics selections for a manufacturer considering carbon emission and logistics levels

Abstract

Improving logistics levels requires mobilizing more resources, resulting in more carbon emissions. We consider a manufacturer selling its products through an e-commerce platform that sells them to customers (reselling) or directly accessing customers via the platform by paying a proportional fee (agency selling). Under reselling, the manufacturer first sets a wholesale price and then the platform sets a retail price and a logistics level. Under agency selling, if using third-party logistics, the manufacturer sets the retail price and logistics level. When using the platform logistics, the manufacturer sets the retail price and the platform sets the logistics level; moreover, the manufacturer bears part of the logistics cost. This study examines the manufacturer’s sales model and logistics selection and its impact on the platform’s profit and consumer surplus. We find that if the logistics-improving efficiency is sufficiently high (low), the manufacturer should employ reselling (agency selling and third-party logistics) when the manufacturer bears a sufficient small or large part of the logistics cost. However, regardless of the size of the logistics-improving efficiency, the manufacturer should adopt agency selling and platform logistics when the logistics cost borne by the manufacturer is intermediate. If consumers become more sensitive to carbon emission levels, the manufacturer is less (more) likely to adopt the reselling model and platform logistics (agency selling model and platform logistics). Choosing reselling or agency selling and platform logistics, or agency selling and third-party logistics could benefit both the platform and consumers, generating a “win-win-win” outcome.