Research On Distribution Co-opetition Strategy Of Competitive E-commerce Enterprises

Since the beginning of the 20 th century,the e-commerce industry has sprouted from almost zero to the current stage of rapid development.Especially since 2010,China's ecommerce industry has grown up to maturity,which now has a huge scale.Nowadays,the development of e-commerce industry has driven more and more businesses to start online sales,and because of the expanding of huge e-commerce platforms,such as Alibaba,JD or Amazon,they have attracted a lot of businesses and a large number of users.Therefore,many brand retailers or individual sellers chose to sell products through the e-commerce platforms,resulting in a question or dilemma to many online retailers: is it better to invest on one's own distribution/logistics operation or to use the delivery service provided by marketplace firms e.g.Amazon or Alibaba? As these two ways are the most common patterns of e-commerce.Inspired by this question,we consider a competitive setting in which an e-tailer and a marketplace firm(e.g.Amazon or JD.com)sell substitutable products.The e-tailer may choose to contract with the marketplace firm to use its delivery service.For the e-tailer,service cooperation improves the service delivery level,which results in an increased customer demand,but comes at some expense such as a unit delivery rate when outsourcing its delivery service or a membership fee with a lower unit delivery rate when obtaining a membership.For the marketplace firm,providing delivery service will generate additional revenue income.However,for both firms the delivery service cooperation will have a negative impact on their profitability when they face a strengthened competitor in the competition for customer demand.We analyze the optimal decisions for both the e-tailer and marketplace firm and characterize the system equilibrium.We find that firms' decision on service coopetition is mainly determined by the trade-off between the benefits gained from cooperation and financial loss incurred when facing a strengthened competitor.The magnitude of benefit and loss from service coopetition is influenced by the difference in delivery service level of the two firms and the intensity of both price and delivery service competition in the market.