Impact of the introduction of marketplace channel on e-tailer's logistics service strategy

We recently observe that some giant e-tailers (e.g., Amazon and ) introduce marketplace channels by allowing third-party sellers to sell products through their platforms. Logistics service acts as a vital role in the operation of online platforms. In practice, the platform can outsource logistics service to third-party logistics providers (named as a third-party logistics strategy) or establish a self-run logistics network to distribute products (named as a self-run logistics strategy). This paper investigates the e-tailer's logistics service strategy in the presence of the marketplace channel's introduction. We reveal that the cost of logistics service plays a major role in determining the optimal logistics strategy. The self-run logistics strategy provides a low logistics service cost to the platform, which results in a higher consumer surplus in comparison with the third-party logistics strategy. Further, we find that when the logistics service cost is low, the platform prefers to establish self-run logistics in the presence of the marketplace channel. Finally, our results show that under the third-party logistics strategy, the platform benefits from the marketplace channel in the presence of an intermediate commission fee and a low discount factor. Based on game-theoretic models, some managerial insights are suggested for online retailers to choose the optimal logistics service strategy in the presence of introducing the marketplace channel.