Centralization or Decentralization: Sales and Logistics Control Strategies of E-commerce Platforms in the Competitive Supply Chain

Abstract In the context of differentiated logistics competition, this paper adopts the Hotelling model to investigate the strategic game between two oligopolistic e-commerce platforms, which dominate the e-commerce supply chain, regarding the combination of sales and logistics modes. Through profit comparison and numerical simulation, we uncover the following insights: (1)When logistics services are heterogeneous, even if sales is homogeneous, the two platforms adopt distinctly different control strategies for both sales and logistics, resulting in a single separated Nash equilibrium in the game. (2)Neither platform has a dominant strategy, and any combination of sales and logistics under self-operation or third-party operation may become the platform's strategic choice, leading to multiple separated Nash equilibria between the two parties. (3)Both parties cannot simultaneously maximize their profits, but a platform that adopts full centralization, especially in logistics, achieves a higher profit level than a competitive platform. Therefore, both parties have a need for integrated operations that seek centralized logistics and sales, which can easily lead them into a "prisoner's dilemma" where both suffer losses.