Channel strategies and pricing decisions of new business models for doorstep logistics

Abstract

Doorstep logistics has delighted in overpowering development in the era of ecommerce. However, doorstep logistics faces significant challenges, such as high fixed investment in warehousing and inefficient trips in first or last-mile logistics. This thesis proposes systematic business models to prompt various stakeholders to collaborate for doorstep logistics by game-theoretical approaches. This thesis investigates four scenarios. The first investigates the Product Service System in warehousing automation, where the warehouse operator subscribes the automated services to serve ecommerce businesses. The automation company invests in providing automated service while retaining the ownership of automation facilities and recovers its cost by sharing the operator's revenue. Five business models are established and compared to ascertain the feasibility of a win-win situation. The first scenario probes into the pricing mechanism of the warehouse operator and service level decisions of the automation company. It is found that the warehouse operator should adopt non-automatic operation policies in most cases. The second scenario explores the possibilities of establishing a common service platform for the first mile. Two competing courier logistics companies can choose to cooperate with the cost-efficient platform to enjoy a saving, while the outsourcing channel erodes the market shares of their original channel. By proposing three models, it presents the combined effect of internal competition and cost saving on companies’ welfare and customers’ consuming experience. The findings show that in most cases, outsourcing helps companies gain a profit increment, and customers benefit from a price decrease. However, when customers’ loyalty is moderate, they will suffer a price increase, though companies are better off. Additionally, given that the cost advantage of outsourcing is slighter, and customers show more negligible difference to two channels, the internal competition overtakes the effect of cost sparing. The third scenario explores a supply chain consisting of two competing furniture suppliers (FSs), of which the leader FS 1 helps the follower FS 2 in last-mile logistics. However, FS 2 intends to set up a self-operating delivery system. It investigates three scenarios, where FS 2 is less cost-efficient and FS 1 has an inferior brand image. The models are extended to consider the interaction between two FSs with the same quality perceptions and environmental concerns. It is found that when FS 2’s extra cost is acceptable, the coopetition model is the ultimate equilibrium. The quality difference has no impact on the cooperation but affects the competition. In some cases, their profits drop in the increase of greenness levels leading to a passive attitude to promoting a more environmentally-friendly furniture delivery way. The fourth scenario offers suggestions to an online platform when entering a new market, including the channel selection, pricing mechanism, and delivery distance decisions. By comparing the performance of the four models, this scenario suggests that the platform’s decisions on the delivery distance in the cooperation model are extreme without an intermediate value between 0 and 1. The ultimate equilibrium of the market is the competition model, where the platform runs an online channel independently.