Study On Operation Model Of E-commerce Platforms Based On Consumer Heterogeneity

Recently,online shopping has become one part of our daily life.Following the trend,a great variety of e-commerce platforms emerge and have achieved big successes.A suitable operation/business model is one of the key factors for the success of a platform.There are two popular operation models: agency model and wholesale model.Under the agency model,the platform offers a marketplace for sellers to sell their products,and charges commissions from those sellers.Under the wholesale model,the platform first buys products from manufacturers and then directly sells the products to consumers.Although a number of papers have studied how online platforms should design the operation model,the role of consumer heterogeneity has not been fully understood.Moreover,the focuses of consumer heterogeneity differ in various scenarios.To fill this gap,we conduct this research and optimize the operation model decisions for e-commerce platforms based on consumer heterogeneity.First,we focus on online rental platforms and examine how the consumer heterogeneity in valuing trust affects the platform's agency model design.Specifically,we consider a twoside online rental platform connecting hosts and consumers.Two alternative types of agency model are available: one-side agency model under which the platform only charges hosts,and both-side agency model under which the platform charges both hosts and consumers.Moreover,we consider two types of consumers: traditional consumers who under-value online trust and online-shopping-type consumers who normally value online trust.Our results indicate that the one-side agency model can be the platform's preferred choice if and only if there are traditional consumers in the market.Moreover,the platform prefers the both-side agency model to the one-side agency model when the number of traditional consumer is small and/or the cost coefficient to build consumer-side trust is low.Finally,we examine how the chosen agency model affects social welfare and find that only the one-side agency model can generate a win–win outcome for both the platform and the social planner.By revealing the impact of consumer heterogeneity in valuing online trust on online rental platforms' agency model design,this part of the study can enrich the literature stream related to business and operation models of online platforms.Second,we focus on online promotion platforms and examine how the consumer heterogeneity defined by whether consumers are aware of the local merchant affects the platform's agency model.Specifically,we consider an online promotion platform,a local merchant,and consumers.Some consumers are aware of the merchant's offerings at the beginning,and we name them as informed consumers;some consumers are unaware,and we call them as uninformed consumers.Moreover,informed consumers know the true product quality,but uninformed consumers don't know the true product quality.Following literature,we assume uninformed consumer under-estimate the product quality.Given the commission rate charged by the promotion platform,we first identify the conditions under which the merchant should offer a deal.Subsequently,we optimize the commission strategy for the online promotion platform and find that the platform should set a commission rate depending on both the number of informed consumers and the degree that uninformed consumers under-estimate the merchant's product quality.This part can enrich the literature stream related to the probability of online promotion business and the strategy of online promotion platform.Third,we compare the agency model with the wholesale model for online retail platforms under a context wherein only the new product is sold in the market.There are both new users and old users,since some consumers have purchased the old version of the product.The results indicate that the market segmentation affects the retail platform's choice and induces the platform to adopt the agency model rather than the wholesale model only when the number of old users is small and the old product's quality is low,or when the number of old users is intermediate and the old product's quality is high.We also consider the pricediscrimination strategy adopted by either the retail platform under the wholesale model or the manufacturer under the agency model,and show that the presence of price discrimination can conditionally change the retail platform's preference.This part highlights the market context consisting both new users and old users caused by the consumer heterogeneity in terms of whether consumers have the old product when the new product is sold in the market,and derives the optimal operation choice between the agency model and wholesale model for the retail platform,which can contribute to the literature stream of operation model comparison for online platforms.Overall,we consider three online trading scenarios in this paper.Under the online rental scenario,we optimize the platform's agency model and highlight the role of consumer heterogeneity in valuing online trust.Under the online promotion scenario,we define the consumer heterogeneity in terms of whether consumers know about the offline merchant at the beginning,and reveal the optimal agency model for the platform.Under the online retail scenario,we consider the consumer heterogeneity in terms of whether consumers have the old product when the new product is sold in the market,and compare agency model with wholesale model for the platform in a consumer market consisting both new users and old users.The conclusions derived in the above three studies can enrich the literature related to platforms' operation model decision,and provide important implications for the development of online platforms and the e-commerce business.