Logistics sourcing of e-commerce firms considering promised delivery time and environmental sustainability

Abstract

Online consumers prioritise swift and dependable deliveries but are also concerned about the environmental repercussions of e-commerce, such as carbon emissions and packaging waste. E-commerce firms, therefore, grapple with balancing short promised delivery times (PDT) and environmental sustainability in a competitive landscape. Through a game-theoretic lens, this study delves into the logistics choices of two rival e-commerce firms. These firms can either manage their own logistics or outsource to third-party logistics providers (TPLs) that have a green edge due to advanced eco-friendly technologies. Our findings reveal that if the e-commerce firms compete on demand, their logistics strategies depend on the TPLs’ levels of green technology readiness. Conversely, intense PDT competition can diminish the TPLs’ benefits, prompting e-commerce firms to handle logistics in-house. Regarding environmental sustainability, the outcomes depend on whether demand or PDT competition drives the firms’ choices. Notably, if both firms compete on PDT, the most sustainable outcome remains elusive. Our conclusions remain consistent even when tested further by model extensions.