695 / 2024-05-13 11:06:59

Is the platform’s AI service consistently better? Impact of service provision strategies in competitive channels

AI service provision, online platforms, channel competition, pricing strategy

E-commerce AI services have recently become indispensable for both online platforms and retailers. This study focuses on an online platform that offers AI services for itself and its associated retailer. The retailer competes with the platform by offering substitute products and may seek alternative service channels as substitutes. Our research delves into the dynamic interaction between the platform's decision to provide AI services, the retailer's selection of service channels, and the contract strategies employed by both the platform and the retailer. The findings reveal that if the service cost is not high, the platform opts for fixed and proportional commission contracts to offer its services. Additionally, the retailer prefers the platform's service under the fixed commission contract rather than the proportional commission contract. Interestingly, when the platform refrains from providing its service, the retailer prefers third-party service under a fixed commission contract and its own service under a proportional commission contract. These outcomes hold significant implications for e-commerce platforms considering AI service strategies and policymakers concerned about data management performance.