Commission Fees Research Articles

Uncovering merchants’ willingness to wait in on-demand food delivery markets

While traditional on-demand food delivery services help restaurants reach more customers and enable doorstep deliveries, they also come with drawbacks, such as high commission fees and limited control over the delivery process. White-label food delivery services have emerged as an alternative, ready-to-use platform for restaurants to arrange delivery for customer orders received through their applications or websites, without the constraints imposed by traditional on-demand food delivery platforms or the need to develop an in-house delivery operation. Although several studies have investigated consumer behavior when using traditional on-demand food delivery services, there is limited research on merchants’ behavior when adopting white-label food delivery services. In this research, we develop a non-parametric survival model to estimate merchants’ willingness to wait when using white-label food delivery services and examine how various factors, such as delivery fees, the number of placed orders, and average waiting time, affect merchants’ willingness to wait, drawing on a dataset of both delivered and canceled orders from a crowd-sourcing delivery platform in Singapore. The empirical results show that merchants’ willingness to wait has a non-linear relationship with their average waiting time; it initially increases and then decreases with average waiting time. Moreover, the relationship between merchants’ willingness to wait during the pick-up stage and their average waiting times in the matching stage follows a similar non-linear trend. Merchants who have experienced lengthy waiting times on average in the matching stage tend to be less patient in the pick-up stage. This research sheds light on the stage-specific dynamics of merchants waiting behavior in white-label delivery service and provides insights for delivery platforms to optimize their operational strategies and enhance user experiences.

Breaking Barriers: Investigating Technology Adoption in Micro, Small, and Medium Enterprises (MSMEs) Among Low-Income Women Entrepreneurs in Malaysia

In Malaysia, the B40 segment, particularly low-income women entrepreneurs, faces distinct challenges in adopting technology within their businesses. This qualitative study explores the low uptake of technology adoption among these entrepreneurs to understand the underlying dynamics. By addressing the "what" and "why" of low technology adoption, the research aims to provide insights for fostering inclusivity and empowerment within Malaysia's entrepreneurial landscape. The study involved an in-depth focus group discussion with 25 women entrepreneurs from four states across Malaysia, utilizing thematic analysis with Atlas TI. Key findings reveal issues related to technology adoption based on TAM theory. The findings indicate that most entrepreneurs are integrating technology into their business operations, either through social media marketing, e-commerce platforms, cashless payment methods, online delivery services, and machines, regardless of whether they are located in rural or metropolitan areas. The majority of the respondent are utilizing technology through their social media marketing. These situations have arisen as a result of the impact of COVID-19, which has compelled all entrepreneurs to adopt technology, even at a minimal level. The majority use social media platforms like Facebook and WhatsApp for marketing and adopt online banking and cashless payment methods such as DuitNow QR Code, Touch 'n Go, Boost, Shopee Pay, and Sarawak Pay. Despite using online food delivery services like Food Panda and Grab Food, trust issues such as payment delays, non-payment by drivers, and high commission fees make these platforms less appealing. Additionally, entrepreneurs prefer traditional methods over machinery to maintain quality and struggle to meet e-commerce demand due to their small-scale production, limiting their ability to fully use technology for business growth and sustainability. The findings support the theoretical insights of the TAM model and suggest actionable strategies for fostering technology adoption and empowerment among low-income women entrepreneurs in Malaysia.

The Impact of Google’s Platform Policy on Content Providers: Focusing on the Enforcement of Payment Methods and the Application of Increased Commission Fees

The Impact of Google’s Platform Policy on Content Providers: Focusing on the Enforcement of Payment Methods and the Application of Increased Commission Fees

Does the Dual Representation System of Player Agents in International Football Benefit Players? An Economic Analysis

It is common in international football for the same agent to be paid both commission fees by the purchasing club for negotiating a player salary and a transfer fee. This dual representation creates a potential conflict of interest for the agent. The agent may not negotiate the highest salary for the player if a higher salary reduces the likelihood of a successful transfer by lowering the resources available for the transfer fee. We construct a gamble model of the transfer process and simulate the ex-ante agent commissions rates, expected player salary, transfer fee and club profit under the assumption of dual representation where the buying club pays all agent commissions. The assumption that the quality of the agent increases with the commission rate is essential to the model. Both the player and the club are better off when the club pays both commissions, however the agent is worse off.

Enhancing Consumer-to-Consumer (C2C) E-Commerce through Blockchain: A Model-Driven Approach

The rapid progress of Information and Communication Technology (ICT), especially the Internet, has changed lifestyles in profound ways, including sharing ideas, virtual interactions, digital entertainment, and online transactions. It has resulted in businesses globally turning to electronic commerce (e-commerce) to market products. E-commerce has revolutionized operations with features such as centralized storage and detailed product information in the marketing process. However, the inefficiency and lack of transparency in these centralized systems lead to high costs and limited user control, posing a significant challenge. Challenges include commission fees from E-Commerce providers, which hinder business growth. The research aimed to propose a more efficient and transparent model for Consumer-to-Consumer (C2C) e-commerce using blockchain technology. The C2C model enhanced user transactions and minimized third-party dependence, but centralization increased costs and limited seller access. Thus, a decentralized blockchain approach was proposed for greater transparency in e-commerce. The research innovatively applied blockchain to C2C e-commerce, enhancing market efficiency and transparency. The research method applied was a combination of Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis and practical application. The result shows that the approach succeeds in reducing high costs, transparency of data storage, and dependence on third parties. Blockchain reduces third-party involvement and promotes a fairer business environment because it uses a tamper-proof database for transparency, security, and efficiency in the ever-growing e-commerce ecosystem. Blockchain ensures automated transactions, real-time data tracking, and data security.

Regulating Powerful Platforms: Evidence from Commission Fee Caps

Digital platforms have become increasingly dominant in many industries, bringing the concerns of adverse economic and societal effects (e.g., monopolies and social inequality). Regulators are actively seeking diverse strategies to regulate these powerful platforms. However, the lack of empirical studies hinders the progress toward evidence-based policymaking. This research investigates the regulatory landscape in the context of on-demand delivery, where high commission fees charged by the platforms significantly impact small businesses. Recent regulatory scrutiny has started to cap the commission fees for independent restaurants. We empirically evaluate the effectiveness of platform fee regulation by utilizing regulations across 14 cities and states in the United States. Our analyses unveil an unintended consequence: independent restaurants, the intended beneficiaries of the regulation, experience a decline in orders and revenue, whereas chain restaurants gain an advantage. We show that the platforms’ discriminative responses to the regulation, such as prioritizing chain restaurants in customer recommendations and increasing delivery fees for consumers, may explain the negative effects on independent restaurants. These dynamics underscore the complexity of regulating powerful platforms and the urgency of devising nuanced policies that effectively support small businesses without triggering unintended detrimental effects.

The role of on‐demand delivery platform in competition between manufacturer and retailer

AbstractTraditional retailers can now partner with on‐demand delivery platforms to fulfill consumers' online orders to fight against manufacturers' direct channels. However, it is hard to say whether traditional retailers benefit from cooperating with such platforms due to market encroachment and high commission fees. We build a game‐theoretic model where the manufacturer could decide whether to introduce its direct channel, and the retailer could decide whether to cooperate with the on‐demand delivery platform. We show that when the platform adopts a reasonable pricing and service policy, the retailer can earn more profit when cooperating with the platform. When consumer acceptance of the manufacturer's direct channel is high, the manufacturer should strategically introduce its direct channel even when there are no sales. We also find that the introduction of the platform lowers the retail price at the offline channel, increasing the market's total demand, consumer surplus, and social welfare. The reason lies in the effect of intensifying downstream competition and satisfying the consumer's demand in more market segments.

Compatible or Incompatible: The Interplay of Vertical Differentiation Competition and Third-Party Marketplace Openness

Whereas the cooperation between a software application and a new marketplace could benefit both the two parties, the situation would be significantly perplexed by the competition in a market with two competing applications and a third-party (3P) marketplace. This article develops a game-theoretic model to examine the strategic interactions between two competing software applications and a 3P marketplace in the dimension of compatibility. For the additional segment of consumers, the competing applications decide whether to be compatible with a 3P marketplace. In the meantime, the 3P marketplace decides whether to open and open to which application(s) considering the commission fees from the applications compatible with it. We offer insights into how an application should cooperate with a 3P marketplace by considering compatible choice of its competitor and openness choice of the 3P marketplace. We show that the 3P marketplace will open to either of the two applications or just open to the high-quality application by weighing the awareness level of the consumers for both applications. Both applications will choose to be compatible with the 3P marketplace if its competitor is not available on the 3P marketplace. In addition, our results suggest that competition in the 3P marketplace may benefit the high quality firm under certain conditions, depending on the awareness level of consumers for both applications. However, the low-quality application will never be compatible with the 3P marketplace when the high-quality application is available on the 3P marketplace.

О ПРАВОМЕРНОСТИ ОДНОСТОРОННЕГО ИЗМЕНЕНИЯ ДОГОВОРА БАНКОВСКОГО СЧЕТА ФИНАНСОВОЙ ОРГАНИЗАЦИЕЙ И ПОРЯДОК НАДЛЕЖАЩЕГО УВЕДОМЛЕНИЯ КЛИЕНТОВ О ЕГО ИЗМЕНЕНИИ / ON THE LAWFULNESS OF UNILATERAL AMENDMENT OF A BANK ACCOUNT AGREEMENT BY A FINANCIAL ORGANIZATION AND THE PROCEDURE FOR DULY NOTIFYING CLIENTS OF ITS AMENDMENT

Banking services have become an integral part of our life, providing an opportunity to exaggerate our own financial resources and funds, to obtain a loan or to use such various banking services as money transfers, various kinds of payments, issuance of bank cards, etc. The legislation of the Republic of Armenia does not establish a barrier on changing the terms and conditions of banking services by financial organizations. Any amendment of such agreement should be made in a form that allows to unambiguously establish the client's consent to service with new, changed conditions. One of the most widespread violations of consumer rights in the field of banking services in the Republic of Armenia is the practice of banks, which unilaterally change the original terms and conditions of contracts with their customers without duly notifying them about it. This is often accompanied by the fact that the amended terms and conditions of the contract are published by financial organizations on their official websites, arguing that the clients are duly notified of unilateral changes in the terms and conditions of the banking contract, as the new changes are freely available. Taking into account the discovered practices of unilateral introduction or increase of commission fees by financial organizations (which were not initially set in the agreement or were set in a smaller amount) for transactions within the framework of bank account agreements, it seems necessary to explore the following aspects: 1. Legality of unilateral change of a bank account agreement by a financial organization. This research will be aimed at determining the compliance of the financial organization's actions with the legislation of the Republic of Armenia and the terms and conditions of the existing bank account agreements. 2. The procedure of proper notification of clients on changing the bank account agreement. This article will investigate the procedure and form of notification of customers on forthcoming changes in the terms and conditions of the bank account agreement, as well as determine whether these notifications comply with the requirements of the legislation and provide sufficient clarity and accessibility of information to customers.

App Innovation and Welfare Implications of Platform Commission Fees

App Innovation and Welfare Implications of Platform Commission Fees

Strategic contract selection of an online retailer when implementing store branding

AbstractThis article investigates the impact of demand uncertainty on online retailers' store branding partnerships with manufacturers. The study examines whether such partnerships, involving service effort to boost demand, are effective under uncertain conditions. The supply chain comprises an intermediary and a manufacturer, with the manufacturer facing a service cost disadvantage. The benchmark case is the manufacturer's sale through the agency (AG) contract with the intermediary. Using a two‐period game‐theoretic model, the study analyzes equilibrium prices, service efforts, and profits for the AG contract and two store branding contracts: original design manufacturer (ODM) and acquisition (AC). Findings show that the intermediary adopts store branding when its service cost advantage is significant. The intermediary exhibits a preference for the ODM contract when the commission fee falls within a moderate range. Conversely, when it deviates from this middle ground, the AC contract becomes more favorable. Within the AC contract framework, with low commission fees, specifically when the service cost advantage is not particularly pronounced and demand variability is high, the intermediary opts to trigger the acquisition option exclusively when the actual demand turns out to be substantial. With high commission fees, the intermediary avoids the acquisition option. These outcomes arise from balancing the double marginalization effect caused by factors like service cost advantage, service decentralization, and wholesale price. Implementing store branding through ODM or AC contracts enhances supply chain profit when it is optimal for the intermediary. We provide insights into online retailers' decision‐making regarding store branding partnerships with manufacturers under demand uncertainty. It highlights the importance of considering factors like service cost advantage, service decentralization, and wholesale prices to determine the optimal store branding strategy. The research contributes to understanding supply chain dynamics and suggests ways to enhance supply chain profit in online retail.

Strategic use of fare-reward schemes in a ride-sourcing market: An equilibrium analysis

Reward schemes are common in ride-sourcing markets. Each reward scheme incentivizes users with economic benefits as rewards for rides from the ride-sourcing platform. In practice, reward schemes differ in terms of their operational features. Operational features are the ways in which a ride-sourcing platform manages a reward scheme and users perceive and redeem their rewards. Therefore, different reward schemes involve different decision-making contexts for the platforms. As a result, it poses a challenge to understand the behavior of platforms with different types of reward schemes in the market. To address this challenge, this study analyzes the impacts of point-based and crypto-based fare-reward schemes on a ride-sourcing market. The market is defined as a mathematical model in which a ride-sourcing platform determines trip fares, commission fees, and rewards for passengers and drivers to maximize matching profits. A points-based reward scheme offers loyalty points with fixed redemption values. Issuance of point rewards incurs a liability for the reward scheme to accept users' point redemptions in the future. The crypto-based approach involves the cost of securing cryptocurrencies to reward users. Crypto rewards have various redemption values. Therefore, users perceive the value of crypto rewards based on their beliefs regarding their future value. This study performed an equilibrium analysis to elucidate the relationships between platform decisions and endogenous variables in the market using two fare-reward schemes. Subsequently, the properties of the optimal market solutions are further explored. These properties provide insights into the platform's reward and pricing decisions as follows: First, it is shown that a ride-sourcing platform is likely to adopt a single-sided reward strategy; that is, the platform's reward decisions with reward schemes are made exclusively between passengers and drivers. Second, the heterogeneity of user redemption behavior polarizes the platform's pricing decision on trip fares; that is, a ride-sourcing platform has incentives to set lower and higher trip fares when deciding to reward drivers and passengers, respectively. Third, such distinctive pricing decisions balance passenger demand with driver supply. Therefore, the ride-sourcing market can remain stable and efficient, even in the presence of the platform's reward decisions. A series of numerical experiments were performed to verify the findings of the current study.

Games of supplier encroachment channel selection and e‐tailer's information sharing

We consider an e‐tailer's upstream supplier who wants to encroach into retailing to earn additional revenue. The supplier needs to decide whether or not to enter the retail market by either selling to consumers on the e‐tailer's platform by paying commission fees (agency encroachment) or opening an independent online/offline retail store (direct encroachment). The e‐tailer has private demand information and decides whether or not to share it with the supplier. Two leadership scenarios—the supplier‐leads (i.e., the supplier selects the channel before the e‐tailer decides whether to share information) and the e‐tailer‐leads (i.e., the supplier selects the channel after the e‐tailer decides whether to share information)—are examined. Our main findings are as follows. First, we show that the e‐tailer has no incentive to share information under no encroachment and direct encroachment. Interestingly, this result holds in both leadership scenarios. Second, a medium commission rate gives rise to an equilibrium of agency encroachment with information sharing by the e‐tailer. This equilibrium is more likely to sustain in the supplier‐leads scenario than in the e‐tailer‐leads scenario. Third, agency encroachment brings the supplier the highest sales volume (at retail in the encroaching channel plus on wholesale to the e‐tailer) when the two parties compete in quantity while direct encroachment does so for a price competition. Fourth, supplier encroachment always improves consumer surplus, but it is not necessarily welfare‐improving. Last, we find that the e‐tailer is more willing to share information to induce the supplier to encroach through his agency channel if he has a significant selling cost advantage over the supplier or can endogenously determine the commission rate.

The Culture Policy for MSME in Digital and Their Prospects

The current era of digitalization forces entrepreneurs to change their marketing strategy from direct sales to online sales, either in whole or in part. However, the transition is not easy for micro, small, and medium-sized enterprises () because of the limitations of knowledge and facilities they have, so the process goes gradually. The study aims to find out the contribution of online marketing for micro-small enterprises to the resilience of enterprises during the restrictions that have lasted for two years. The study is also a policy recommendation against some digital policy directions against MSME by the Ministry of Informatics and Communications of the Republic of Indonesia. The research object is a member of ISMEA (Indonesia Small Medium Enterprises Association), which meets the business age criteria of more than 2 years, actively performs hybrid sales (online and offline), and is able to survive during that time. Research methods are carried out qualitatively through descriptive, participatory observation. In-depth interviews were conducted with informants selected using snowball techniques. The results of the research found that online marketing on MSME is carried out through independent web hosting or through marketplace or e-commerce applications available or be used simultaneously. Self-marketing has the advantage that it does not require commission fees from the other party, so the entire profit becomes the seller's. However, it also has a weakness with its limited market accessibility as it requires costs to promote the site. While marketing through the marketplace has the advantages of the wide range of the market and the limitation of the promotion of the applicator, it also has disadvantages such as commission fees for applicators and price competition with providers of similar products or services in the same application or other applications. The conclusion obtained is that MSME is more familiar with using social media compared to the marketplace, in addition to the fact that web hosting is rarely used, even though it is free. The stages providing an appearance in the application require their own skills. While the direction of the marketing digitization policy on MSME that has been running for this time has begun to form a culture of marketing digitalization for micro and small enterprises, especially the use of the application for product delivery.

Upstream information sharing in platform-based e-commerce with retail plan adjustment

We examine the incentive of an e-commerce platform to share advanced market demand information with a seller offering an assortment of products on its platform. The platform can operate either as a reseller, setting retail prices, or as a marketplace provider, earning commission fees. The shared information comprises the preferences of the consumers who shop on the platform. With this shared information, the seller can adjust its retail plan according to revealed consumer preferences in each planning cycle. Our analysis revolves around three factors: market variability, the cost of adjusting the retail plan, and the intensity of in-platform competition faced by the seller. Our results indicate that in the reseller setting the platform can be either better off or worse off with information sharing, whereas in the commission fee setting the platform invariably benefits from information sharing. If the platform shares information, it is generally beneficial for consumers in the reseller setting but could be harmful in the commission fee setting. We propose a price ceiling mechanism to incentivize information sharing. Our findings reveal that this price ceiling mechanism is superior to the subsidy mechanism as it yields benefits for all parties – the seller, the platform, and consumers – through information sharing. These results offer valuable insights to e-commerce platforms regarding strategic decisions on information sharing services and contract design to ensure mutual benefits.

Price competition in ride-sharing platforms: A duopoly supply chain perspective

A ride-sharing platform with a price-setting power mechanism exists in practice. However, it is unclear how supply chain transactions (ride price) and yields are affected due to a commission fee on ride-sharing platforms. To better understand, this study explores the impact of the service provider’s price-setting (Model S) and service enabler’s price-setting (Model E) power mechanism on supply chain profit under the influence of price competition in a sharing economy. We consider duopoly supply chains, wherein in one supply chain, a service provider delivers service through a service enabler, and in another, service providers offer direct customer service. Mathematical models are developed to analyze the difference in price-setting power mechanism effect, considering marketing efforts under different competitive scenarios. Results show that the supply chain profit is highest when the service provider sets the transaction price in Model S. Furthermore, when the commission fee exceeds a certain threshold (0.5), the total profit in Model E increases, but in Model S it decreases. In ride-sharing platforms, the service provider loses with a rise in commission fees, while the service enabler profits from it. The study contributes to the growing interest in the intricacies of sharing economy businesses.

Double Taxation of Commission Fee of International Technology Trade and Corresponding Strategies

With the progress of the times, the increasing degree of economic globalization and the rapid development of the international trade industry, international technology trade has become one of the main forms of international trade. International technology trade is of great significance to the transformation and upgrading of a country's industry and the growth of the national economy, and some problems have arisen while countries pursue technology to trade for the purpose of achieving mutual benefit and win-win situations. The article first explains the problems related to international technology trade and commission fees and then analyzes the current taxation status of international technology trade commission fees, mainly studying some problems of the taxation systems of countries around the world and the repeated collection patterns of developed countries for technology trade commission fees. It also points out a series of problems caused by the double taxation of technology trade commission fees, such as: affecting the normal trade between technology suppliers and recipients, causing the high cost of technology transfer, and making the international technology trade market disorderly. Finally, the solution to the problem of double taxation is given, and at the same time, corresponding countermeasures are proposed for improving the development of international technology trade in China.

Online retailer bundling strategy in a dual-channel supply chain

Bundling is typically used by online retailers and is receiving increasing attention. We investigate bundling in a dual-channel supply chain whose members use an agency selling contract, where a manufacturer distributes its product with a constant price in the dual-channel and pays a commission fee for each product sold through the online retailer's channel. The online retailer can sell the product separately or, if the contract allows, package it as a bundle and decide the price of the bundle. A Stackelberg game model is developed to obtain insights for optimizing bundling decisions. First, we find that the manufacturer and online retailer cannot always benefit simultaneously from bundling. Bundling could often benefit the retailer but hurt the manufacturer because bundling transfers consumer demand from the manufacturer's channel to the retailer's channel, making the manufacturer pay more in commission fees. Second, we show that bundling can achieve a win-win outcome only when the online retailer sets a low price for the bundle and the commission rate is moderate. Our findings emphasize that the commission rate significantly impacts the optimality of bundling, and neither a low nor a high commission rate can make the two sides agree about adopting bundling.

Regulating Powerful Platforms: Evidence from Commission Fee Caps

Owners of multi-sided platforms typically possess strong power over complementors. Such power asymmetry gives platform owners the edge on setting high platform fees to capture most of the surplus created on their platforms. While there is a heated debate on regulating these powerful platforms, the lack of empirical studies hinders the progress towards evidence-based policymaking. This research empirically investigates this regulatory issue in the context of on-demand delivery. Delivery platforms (e.g., DoorDash, Grubhub, and Uber Eats) charge restaurants a commission fee, which can be as high as 30% of the order amount. To support small businesses, recent regulatory scrutiny has attempted to cap the commission fees for independent restaurants. This research empirically evaluates the effects of platform fee regulations on restaurants, by investigating recent regulations across 14 cities and states in the United States. Our analyses show that independent restaurants in regulated cities (i.e., those paying reduced commission fees) experience a decline in orders and revenue, whereas chain restaurants (i.e., those paying the original fees) see an increase in orders and revenue. This intriguing finding suggests that chain restaurants, not independent restaurants, benefit from the regulations that were intended to support independent restaurants. We find that platforms’ responses to the regulations may explain the negative effects on independent restaurants. That is, after cities enact policies to cap platforms’ commission fees, delivery platforms become less likely to recommend independent restaurants to consumers, and instead turn to promote chain restaurants or nearby restaurants from non-regulated cities. Moreover, delivery platforms increase their delivery fees for consumers in regulated cities, suggesting that these platforms attempt to cover the loss of commission revenue by charging customers more. These findings provide empirical evidence for policymakers to evaluate the effectiveness of platform fee regulations.

Platform contract selection and coordination contract design in reward-based crowdfunding

<p style='text-indent:20px;'>As a new financing method, crowdfunding has alleviated the capital pressure for start-ups, and has attracted extensive attention of scholars. As an intermediary, crowdfunding platforms obtain benefits from providing services. However, the way of charging commission fees still remains a problem for platforms. This paper investigates the impacts of three service contracts, i.e., revenue sharing contract, per-unit fee contract, and fixed fee contract on the creator and platform. Using backward induction, we derive equilibrium results and get some conclusions. First, we find that under fixed fee contract, due to the trade-off between commission fee and crowdfunding success probability, the platform can only make decisions according to first-order conditions, and get partial profits from the creator. This contradicts the traditional view that the fixed fee contract allows leaders to get all the follower's profits in a stackelberg game. Further, we find that compared with revenue sharing contract and per-unit fee contract, the fixed fee contract is mostly although, not always worse (better) for the platform and system (the creator). Third, in the case of consumer homogeneity, we prove the equivalence of revenue sharing contract and per unit fee contract. However, we find that the efficiency of revenue sharing contract decreases when quality is endogenous, while when consumers are heterogeneous, the advantage of per unit fee contract for the platform decreases. In addition, we design a two-part tariff contract and prove that it can achieve coordination when the platform bears partial fixed cost. The two-part tariff contract can simultaneously improve the benefits of all parties with the appropriate parameters.</p>