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An R-Based Landscape Validation of a Competing Risk Model
Published on: September 16, 2022
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Financing the capital-constrained online retailer with risk aversion: coordinating strategy analysis
Yi Tao1, Ruisi Yang1, Xiaopo Zhuo2
1School of Management, Guangdong University of Technology, Guangzhou, 510520 People's Republic of China.
Annals of Operations Research
|April 11, 2022
Summary
This study shows that risk-averse online retailers (OR) increase promotional efforts and order less. E-commerce platforms (EP) respond with higher fees, but retailers still prefer EP financing over bank loans.
Area of Science:
- Supply Chain Management
- E-commerce Operations
- Financial Services
Background:
- Capital-constrained online retailers (OR) operate within e-commerce platforms (EP) that offer financial services.
- ORs invest in demand-promoting activities such as sales promotions and advertising.
- E-commerce platforms act as financiers, influencing retailer operations.
Purpose of the Study:
- To investigate the dynamics of an e-commerce platform-based financing scheme.
- To analyze the impact of online retailer risk aversion on operational and financial decisions.
- To develop and validate supply chain coordination contracts.
Main Methods:
- A game-theoretic model is developed with the e-commerce platform as the leader and the online retailer as the follower.
- Analysis incorporates the online retailer's risk aversion.
- Revenue-cost sharing contracts are designed for supply chain coordination.
Main Results:
- Risk-averse online retailers exert higher effort levels, leading e-commerce platforms to set higher usage fee rates.
- Increased risk aversion in online retailers results in lower order quantities.
- Designed revenue-cost sharing contracts effectively coordinate the supply chain.
- Online retailers demonstrate a consistent preference for e-commerce platform financing over traditional bank financing.
Conclusions:
- The study highlights the strategic interplay between retailer risk aversion and platform financing.
- E-commerce platform financing offers advantages over bank financing for online retailers.
- Coordination mechanisms can mitigate supply chain inefficiencies arising from financing structures.
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