Q-commerce service with behavior-based pricing: self-logistics or platform-logistics?

Abstract

PurposeConsidering behavior-based pricing strategy, we explore the choice of instant logistics service model and pricing strategy of Quick-commerce channel.Design/methodology/approachWe adopt the Hotelling framework to develop a two-period game in which two horizontally differentiated suppliers sell repetitively purchased products through a traditional e-commerce channel and an instant e-commerce channel in two periods.FindingsThe results show that: (1) when consumer’s mismatch cost and instant logistics cost coefficient are moderate or relatively high or low, platform-operated logistics (PL) is more beneficial to traditional supplier and traditional e-platform, while Q-commerce platform may prefer self-operated logistics. However, for Q-commerce suppliers, as his/her instant logistics cost coefficient increases, he/she tends to prefer PL. (2) If the instant logistics cost coefficient is moderate, traditional suppliers may always earn more than Q-commerce suppliers in both models, despite the higher commission rate of traditional e-platform. (3) When the instant logistics cost coefficient for Q-commerce suppliers is low, traditional suppliers should significantly reduce price for new customers under PL.Originality/valueOur research constructs a competition between traditional and quick commerce channels, using game theory methods to examine the impact of different instant logistics models on the dynamic pricing strategies, profitability and instant logistics efficiency of these two online channels.