Joint optimization of e-commerce supply chain financing strategy and channel contract

Shuhua Chang, Anqi Li, Xin Wang and Xinyu Wang

European Journal of Operational Research, 2022, vol. 303, issue 2, 908-927

Abstract: With the rise of the e-economy, online retailers, which are often financial-constrained, can choose to borrow from e-commerce platforms in addition to traditional financial institutions. Many e-commerce platforms adopt two types of market channel cooperation contracts: Reselling or Marketplace. We model their interaction as a Stackelberg game, studying the interaction between the financing strategies of the online retailers and the channel sales cooperation contracts of the e-commerce platforms. We observe the characteristics and applicable conditions in four modes. Results show that the working capital level of the online retailer will affect the preferences of both parties. Specifically, when working capital is low, platform direct financing has no advantage over bank financing. By contrast, a higher level will affect the operational decisions of the e-commerce platform, mainly due to the trade-off between sales revenue and interest income. Combined with the characteristics of online trading information collected by e-commerce platforms, we find that platform can provide a means of risk control to guarantee the benefits of both parties and solve the financing dilemma caused by low working capital. We further determine that the fixed commission rate of the platform should not be too large, otherwise the profits of the online retailer will be greatly weakened. This paper proves the necessity of the existence of transfer payment platform usage fee. Our findings not only complement the emerging online marketplace literature for e-commerce platforms but also provide enlightenment on working capital management for small and medium-sized enterprises and self-employed individuals such as online retailers.

Keywords: E-commerce; Online marketplace; Supply chain finance; Channel contracts; Working capital management (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:303:y:2022:i:2:p:908-927

DOI: 10.1016/j.ejor.2022.03.013

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