Re-Ordering Product Strategy for the E-Commerce Company Under the Pledge Financing Business of the E-Commerce Platform

Abstract

With the development of platform economy, inventory pledge financing business in e-commerce platforms has been widely used in recent years.In this paper, we consider the reordering strategy of the e-commerce company and the corresponding financing strategy of the platform when the e-commerce platform provides chattel financing to the e-commerce company trading on the platform. The products reordered by the e-commerce company are two products with different risks and returns. We use the Stackelberg game model in the framework of the newsboy model, in which the e-commerce platform is the leader and the e-commerce company is the follower. When the e-commerce company pledged its inventory to the e-commerce platform to obtain loan funds and used the loan funds to reorder products, we found the following conclusions. First, the initial inventory affects the ordering strategy of the e-commerce company and the corresponding platform financing strategy. When the market demand is in a certain state, the e-commerce company will order more products with less risk as the initial inventory of pledges increases. And the more the initial inventory of pledges the greater the interest rate offered by the e-commerce platform instead. Second, we get information about the relationship between the ordering strategy of the e-commerce company and the financing rate and service rate of the e-commerce platform. The higher the financing rate and service rate, the more risky products the e-commerce company is willing to order. Finally, we obtain that the interest return and the service fee return of the e-commerce platform are alternative, and the optimal financing rate of the platform decreases with the increase of the service fee rate. The platform needs to balance the relationship between the two instruments of service fee and interest when developing inventory financing strategies.

Keywords: re-ordering strategy, the e-commerce platform, inventory pledge financing