The strategic analysis of collection delivery points network sharing in last-mile logistics market

Abstract

In last-mile delivery, due to its efficiency advantage over home delivery, collection delivery points (CDP) strategy is adopted widely by express companies but implemented in different modes: some express companies build CDP networks by themselves but some other cooperate with third-party CDP networks. In recent years, a new business-to-business sharing mode has emerged: express companies with CDP networks share them with those without. Motivated by this phenomenon, to examine express companies’ CDP network sharing strategy, we consider a competitive express service market comprising one express company with CDP network (CDP provider) and one without (CDP receiver). We find that the CDP network sharing always benefits CDP provider. However, interestingly, it hurts CDP receiver when CDP strategy’s efficiency advantage is large. Therefore, CDP provider can lower the usage fee charged to stimulate CDP receiver to accept the sharing offer. Consequently, CDP provider can always reach an agreement on CDP sharing with CDP receiver. Furthermore, we examine the impact of CDP sharing on market potential. More interestingly, CDP sharing leads to a double-win outcome in certain situations, even though it has some negative impact on market potential. Our findings provide implications for express companies having options to participate in CDP network sharing.