Carbon footprint reduction in an e-commerce market: impacts of logistics service sharing

Abstract

In the e-commerce market, green technology investment and carbon offset purchase are two widely-used approaches for reducing the carbon footprint of logistics services. However, implementing carbon footprint reduction in logistics services generally incurs heavy costs. To distribute heavy costs and improve resource utilization, a novel strategy of logistics service sharing has played an important role. Nevertheless, it is still unclear, in a co-opetitive e-commerce market, how to make use of different approaches and what the impacts of logistics service sharing are. To answer these questions, we develop an analytical model where an e-commerce platform and a third-party seller compete for consumers who care about both the selling price and the logistics service carbon footprint. We assume that the platform builds his own logistics service system and can adopt two different approaches to cut carbon footprint, while the seller needs to outsource logistics services to the TPL service provider or the platform. The analysis shows that without logistics service sharing, the platform may be more willing to purchase carbon offset as the offset cost increases, and the availability of carbon offset can prompt the platform to increase his investment in green technology. By contrast, with logistics service sharing, the platform will be less willing to purchase carbon offset as the offset cost increases, and the usage of carbon offset will induce him to invest less in green technology. These findings highlight that logistics service sharing can change the platform's preference toward the two approaches and modify the relationship between them. Furthermore, we find that logistic service sharing can provide a win-win outcome for the platform and the seller, but is not necessarily helpful for reducing the total carbon footprint in the e-commerce supply chain as well as increasing consumer surplus and social welfare.