Impacts of logistics resource sharing on B2C E-commerce companies and customers

Abstract

Logistics resource sharing between competing B2C E-commerce companies is common in recent years. But still different B2C E-commerce companies make different decisions in the way of providing logistics service. To find out the reason behind this difference, we in this paper intend to investigate the impacts of logistics resource sharing on the participators. Specifically, we study the logistics resource sharing problem between two B2C E-commerce companies. One company has self-run logistics (SRL) system (we denote it as SRL provider) and shares its logistics to the other company which does not have self-run logistics system but resorts to third-party logistics (3PL) previously (we denote it as SRL receiver). We build and solve two Hotelling models to examine the impacts of the sharing on the optimal prices and profits of two companies, consumer welfare, and social welfare. We find that three parameters are critical in determining the impacts, i.e., the degree of differentiation between two companies, customers’ logistics benefit, and logistics provider's logistics efficiency. We find that the sharing always benefits the logistics receiver company, but benefits the logistics provider company only when both the degree of differentiation between companies and the logistics provider's logistics efficiency are relatively high. We also find that the sharing benefits customers only when both the degree of differentiation between the two companies and the customers’ logistics benefit are relatively large. However, the sharing always improves the social welfare.