Distribution Service Competition with the Consideration of Different Consumer Behaviors

Abstract

Logistics distribution plays an important role in the operation of e-commerce firms. This paper considers two logistics distribution modes with service competition: the e-commerce platform self-distribution (SDL) mode and third-party logistics (TPL) mode. By introducing consumer behavior into the model, we examine the competition between two firms with the same functionalities in the context of e-commerce. According to the real scene, we build the corresponding mathematical optimization model. Each firm needs to decide a logistics distribution mode and a corresponding price for the selected logistics mode. We first analyze the two firms chosen logistics modes and prices simultaneously and then extend it to Stackelberg game situation. We find out the optimal strategy for two firms. Finally, we propose numerical analysis to identify our models and provide a series of managerial insights.