Online sellers’ financing strategies in an e-commerce supply chain: bank credit vs. e-commerce platform financing

Shilin Cai and Qiang Yan ()
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Shilin Cai: China University of Mining and Technology
Qiang Yan: Zhejiang University of Finance & Economics

Electronic Commerce Research, 2023, vol. 23, issue 4, No 21, 2572 pages

Abstract: Abstract We study a supply chain with two competitive online sellers, in which the seller who suffers from capital distress may borrow from a commercial bank or an e-commerce platform. We consider three different supply chain models depending on how many sellers suffer from capital distress. We characterize the sellers’ optimal production decisions and the lenders’ optimal interest rates, and further examine the sellers’ financing preferences. We demonstrate that the e-commerce platform will charge a zero interest rate to the financially constrained seller if the production cost is beyond a certain threshold. It is observed that the financially constrained seller’s financing preference is correlated with the capital status and financing choice of its rival. Specifically, if only one of the sellers is financially constrained, it is always optimal for the capital-constrained seller to borrow from the e-commerce platform. In contrast, if both sellers suffer from capital distress, the two sellers prefer e-commerce platform financing when the e-commerce platform’s commission rate is relatively high or when the commission ratio is low while the production cost is high. Furthermore, it is more profitable for the bank or e-commerce platform to provide financing service to both capital-constrained sellers.

Keywords: Competitive sellers; Capital constraint; Bank credit; E-commerce platform financing; Capital status (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10660-022-09552-w

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