The Retail Platform's Online Credit Offering Strategy

With the development of e-commerce,there has been a massive increase in online demand.More and more consumers find that the current personal disposable income can no longer meet their growing consumer demand.Consumers are eager to seek financial support to relieve their economic pressure.Due to the stringent review process of credit card,its penetration rate is not high,especially in some underdeveloped markets.In addition,the application of new technology in payment methods makes credit card payments relatively backward.Consequently,traditional credit cards can no content with the payment needs of consumers.In the face of the huge consumer credit market,the offering of platform's online credit will help many consumers solve the payment problems,and in turn will promote the platform market.However,consumer credit will also bring additional costs and risks to the platform,such as consumer default risk and the opportunity cost of investment.Moreover,different business models,the credit card competition and channel competition will have an important impact on the value of online credit offering.Hence,how platforms choose appropriate credit strategies in different business models and competitive environments is not only a critical issue that many e-commerce platforms need to solve urgently,but also an important topic that scholars in the field of platform economy are concerned about.This dissertation takes the retail platform as the main research object.Based on the current existing direct sales and seller sales business models,the situation of credit card competition and seller competition,this dissertation explores the credit offering conditions and ways,how to design the subsidy mechanism,and the impact of platform's credit on pricing decisions.The research content and conclusions of this dissertation are as follows:Chapter 3 studies the credit offering strategy and interest strategy of retail platforms based on the self-run and seller-run business models.This chapter considers that consumers are heterogeneous in both disposable income and product valuation.Moreover,consumer credit will bring a positive or negative spillover effect to consumers.In the self-run model,the platform acts as a retailer to sell products to consumers directly.This study finds that when the spillover effect exceeds a negative threshold,the platform will provide interest-free credit.When the spillover is positive,the platform will provide interest credit.In addition,as the spillover effect increases,retail price increases,but demand remains at a high level.In the seller-run model,third-party sellers sell products through the platform.The results show that in addition to the spillover effect,the commission paid by the seller to the platform is also crucial to the platform's credit strategy.When the commission fee is low,the platform will not provide interest-free credit even if the credit spillover is low.Moreover,consumer credit provided by the platform will not harm sellers' profits.Interestingly,when the spillover effect is moderate,credit offering will lead to a decrease in demand.This is completely different from the original intention of the platform to provide credit.By comparing the credit strategies under the two business models,this dissertation finds that the platform is more inclined to provide credit for the self-run products rather than the seller-run products.Chapter 4 studies the platform's credit entry strategy and subsidy mechanism by considering credit card competition.Banks provide consumers with credit card payments,but only a certain percentage of consumers have credit cards.Consumers are heterogeneous in both disposable income and their preference for the two credit products.This chapter first considers the case where the proportion of credit card market is high.In the self-run model,banks and platforms will subsidize consumers when the mismatch cost is low.However,under the private business model,the platform will always choose to charge interest instead of subsidizing consumers.Moreover,in the seller-run model,as long as the entry cost is low enough,the platform will enter the credit market.Under the seller-run model,it is more difficult for the platform to enter the credit market.The platform will only consider entering the credit market when the commission fee is small or the misfit cost is large.This dissertation further extends the model to the case where the proportion of credit card market is low.The results show that as long as consumers'disposable income or mismatch costs of preferences are high,the platform will still subsidize consumers in the seller-run model.In addition,when the commission fee is high or the mismatch cost is low,the platform has a high intention to enter the credit market under the seller-run model.Chapter 5 studies the platform's credit offering strategy by considering the distribution channel competition.The platform and seller sell the same products to consumers.This chapter models that consumers are heterogeneous in the preferences of both purchase channel and payment method.The consumer credit will bring positive or negative spillover to the platform,depending on whether the installment payoff is higher than the default risk and the opportunity cost of investment.This study shows that when the platform's spillover and the degree of differentiation of payment ways are low,the platform offers credit privately will lead to a decrease in platform demand.Moreover,even if the platform achieves a positive spillover,the platform's retail price may decrease when the degree of differentiation in payment ways is low.Interestingly,when the platform gains a positive spillover and provides credit to all channels openly,the demand of the platform will decrease,but the seller will increase.When the credit spillover is high and the degree of differentiation of payment ways is low,the platform chooses to offer consumer credit openly to all channels,and induces an increase of the seller's profit.When the degree of differentiation of payment ways is high,the platform will choose to offer consumer credit privately to the platform channel,but it will hurt the seller's profit.In addition,the credit offering of the platform does not always increase social welfare.This dissertation not only enriches the research on consumer credit theory,but also provides management insights for promoting the development of platform's consumer credit.The main contribution of this dissertation is to expand the consumer credit research from empirical study to model,and to establish a bridge for the consumer credit research and platform operation management.This dissertation determines the key factors affecting credit offering strategy under different business models,considers the credit subsidy mechanism of platform and bank when there is competition in the side of credit product,and discusses the influence of credit strategy on pricing strategy when there is competition in the side of distribution channel.This dissertation takes disposable income as an important factor affecting consumer choice and considers the spillover effect of credit on consumers and platforms,and models consumers' preference for purchasing channels and payment methods.The two-dimensional consumer choice model is used in all three studies.It provides technical support to solve similar scientific problems about two-dimensional distribution.