Studies On Channel Choice And Incentive Contract Design When Platform-selling

With the continued popularity of platform-selling, more and more e-retailers open their own platforms, and increasing manufacturers sell products through the e-retailer’s platforms. At the same time, the customer can make purchasing choice from more subtituble products and they become more sensitive to product’s delivery time. Under the circumstances, this thesis investigates the channel choice of the electronic retailer (e-retailer) and incentive contract based on platform-selling, when consumers are delivery-time sensitive and have private information and the demand of these products is substitutable and random. This thesis constructs the mathematical models of channel choice and incentive contract from the perspective of the e-retailers, who is a retail platform owner. Through the method of mathematical derivation and numerical test of Matlab, we first find the optimal channel choice under different circumstances and then find the optimal incentive contract when the e-retailer decides to open platform.Firstly, investigates the channel choice of the e-retailer who is a retail platform owner-reselling or open the online platform, when consumers are delivery-time sensitive and have private information, in the two-level supply chain comprised of one e-retailer and one manufacturer. Reselling means that the platform owner first purchases from the manufacturer and then resells to end consumers. Opening platform allows the manufacturer to access end-customers directly, but the manufacturer should pay a percentage to the platform owner. When the e-retailer chooses reselling, we analyze which quotation mode:UQM (uniform quotation mode) or DQM (differentiated quotation mode) is more profitable for the e-retailer if the purchasing price is exogenous. When the e-retailer chooses opening his platform, we analyze how the percentage fee affects the manufacturer’s quotation mode if the fee is exogenous. The results show that: the e-retailer may choose reselling when the purchasing price is high; the e-retailer may decide to open platform when the purchasing price is low and the fee is low. In addition, we discuss the influence of customer types and the private delay cost rate to the optimal channel choice of the e-retailer through numerical experiments.Secondly, studies the interactive decisions between a manufacturer and an e-retailer in a platform-selling mode when consumers are heterogeneous and have private information. The manufacturer publishes his information including price and delivery time, etc. through the e-retailer’s platforms and sell products. The e-retailer provides his platform only and charges a percentage fee. Through a two-stage Stackelberg model, we analyze how the manufacturer designs the incentive contract and the e-retailer charges the percentage. We explore the effects of different parameters (private information and cost structure) on the optimal decisions and the performance of each party and the whole chain with the aid of numerical examinations.Finally, investigates a supply chain consisting of two symmetric manufacturers and one e-retailer. Each manufacturer offers one substitutable product and sells it through a platform owned by the e-retailer. The demand of these products is substitutable, price-sensitive and random. The e-retailer only provides the platform and charges a percentage fee from the platform-selling price of the product, which is commonly observed from the e-commerce. Each manufacturer determines the market price and production quantity for his product before the demand met. The market price of each product is announced at the e-retailer’s platform. Observing the information of each manufacturer from the e-retailer’s platform, customers place orders via the platform. Manufacturers then deliver products directly to customers and obtain the net revenue excluding the percentage fee. Manufacturers will bear an underage cost for each of the shortages when customers are not satisfied or bear an overage cost for each of the leftovers. We formulate these interactive decisions through a two-stage Stakelberg game. In the first stage, the e-retailer determines the percentage fee, taking the manufacturers’ responses into consideration. Higher percentage fee can lead to higher market price and lower quantity. Low percentage may decrease the profit margin. Therefore the e-retailer has to trade off these two effects. In the second stage, each manufacturer determines his production quantity and market price under the given percentage fee offered by the e-retailer. As the demand is substitutable, these manufacturers are competitors and they have to carefully determine their market prices. Higher price will cause customers to other competitor’s product. We derive the symmetric equilibrium market price and quantity under the given percentage fee. The determination of the optimal percentage is also discussed in the article. Finally, we conduct an extensive numerical study to investigate the effects of substitutability and costs on the optimal decisions and the performance of each party and the whole chain. We observe that the e-retailer charges a higher percentage and obtains a higher profit when the demand is more substitutable. When the manufacturer’s unit production cost is high, the e-retailer has to decrease the percentage and his profit is also decreased. Therefore, it is better for the e-retailer to offer product types with a strong substitutable feature as e-retailer prefers to choose competitive manufacturers. This indicates that the e-retailer may have a motivation to cooperate with manufacturers to decrease the cost under a proper contract.This article offers a practical and a theoretical guidance on channel choice of e-retailers who rent their own platforms to manufacturers, incentive contract design of manufacturers.