Self-supporting or third-party? The optimal delivery strategy selection decision for e-tailers under competition

Abstract

Purpose

With the vigorous development of the e-commerce delivery service industry, delivery service has become an important factor for e-tailers to obtain the market competitive advantage. However, how to choose the best delivery service strategy is a difficult problem for e-tailers in practice. The purpose of this paper is to investigate the effect of delivery service on e-tailers and online platforms.

Design/methodology/approach

Based on the Stackelberg game, the research study establishes and solves three models, namely dual self-supporting delivery service model, dual third-party delivery service model and differential delivery service model.

Findings

The results show that when the self-supporting and third-party delivery cost coefficients are all small, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a lower service fee. When the self-supporting and third-party delivery service fee are all low, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a smaller service cost. Both service fee and service cost determine the choice of e-tailers' delivery strategy. When the commission rate is moderate, both e-tailers are willing to choose the self-supporting delivery strategy, but the platform only prefers to provide self-supporting delivery to them with a lower delivery service sensitivity coefficient.

Originality/value

This paper analyzes the optimal delivery service strategies for e-tailers to compete with competitors, and explores the impacts of parameters for e-tailers and online platforms in their decision-making. The findings provide valuable implications for relevant practices.

Citation

Yu, J., Song, Z. and Zhou, C. (2023), "Self-supporting or third-party? The optimal delivery strategy selection decision for e-tailers under competition", Kybernetes, Vol. 52 No. 10, pp. 4783-4811. https://doi.org/10.1108/K-02-2022-0216