The optimal combination between blockchain and sales format in an internet platform-based closed-loop supply chain

Abstract

Inspired by the practice of platform retailers cooperates with blockchain technology service providers to improve the recycling rate of waste products and solve the three bottleneck problems of recycling, this paper examines how the platform should optimize the combination of “blockchain & sales format” to improve the economic, social and environmental (ESS) performance of the closed-loop supply chain (CLSC). Through analytical models, three major effects of blockchain are revealed, namely brand premium effect, forward and backward attraction effect, and optimal combined effect. Besides, intuition suggests that the retail price decreases with increasing of consumer sensitivity to reference price effects, this result occurs in cases where reference price effects dominate demand. When the brand effect dominates demand, the counterintuitive result emerges that firms can raise the retail price with increased sensitivity. The implementation of blockchain will amplify the changes through brand premium effect in two corresponding cases. Another interesting finding is that only when the commission rate is extremely low/relatively high, the CLSC member can reach a stable cooperation relationship with the platform selling/agency selling. At the same time, the optimal “blockchain & sales format” of the platform that can achieve the triple benefits of EES in the CLSC is clarified. Furthermore, combined with the platform sales cases of different categories of products, this paper derives the “blockchain & sales format” combination strategy of platform enterprises for the universality of different attribute products.