e-Commerce Game Model - Balancing Platform Service Charges with Vendor Profitability

Zheng Jianya, Daniel L. Li, Li Weigang, Zi-Ke Zhang, Hongbo Xu

2014

Abstract

One of the biggest challenges in e-commerce is to utilize data mining methods for the improvement of profitability for both platform hosts and e-commerce vendors. Taking Alibaba as an example, the more efficient method of operation is to collect hosting service fees from the vendors that use the platform. The platform defines a service fee value and the vendors can decide whether to accept or not. In this sense, it is necessary to create an analytical tool to improve and maximize the profitability of this partnership. This work proposes a dynamic in-cooperative E-Commerce Game Model (E-CGM). In E-CGM, the platform hosting company and the e-commerce vendors have their payoff functions calculated using backwards induction and their activities are simulated in a game where the goal is to achieve the biggest payoff. Taking into consideration various market conditions, E-CGM obtains the Nash equilibrium and calculates the value for which the service fee would yield the most profitable result. By comparing the data mining results obtained from a set of real data provided by Alibaba, E-CGM simulated the expected transaction volume based on a selected service fee. The results demonstrate that the proposed model using game theory is suitable for e-commerce studies and can help improve profitability for the partners of an online business model.

References

  1. Ahmed, E., Hegazi, A. S., 2007. A dynamic model for ecommerce taxation. Applied mathematics and computation, 187(2), 965-967.
  2. Alibaba, 2013. Alibaba Huoshui Challenge. Available from http://huoshui.aliresearch.com/. [Accessed in Aug. 10, 2013].
  3. Cao, L., Mo, D., Wang, Z., Yao, J., 2013. The 2012 annual monitoring report of China e-market. Available from http://www.100ec.cn/detail--6089726.html.
  4. Economist, 2013. E-commerce in China: The Alibaba phenomenon. Economist.
  5. eMarketer, 2013. Ecommerce Sales Topped $1 Trillion for First Time in 2012. Available from http:// www.emarketer.com/Article/Ecommerce-SalesTopped-1-Trillion-First-Time-2012/1009649. [Accessed on July 10, 2013].
  6. Gibbons R., 1992. A primer in game theory. Harvester Wheatsheaf, New York.
  7. Hoffman, D. L., Novak, T. P., 2000. How to acquire customers on the web. Harvard business review, 78(3), 179-188.
  8. Laudon, K. C., Traver, C. G., 2007. E-commerce. Pearson Prentice Hall.
  9. Leontief, W., 1946. The pure theory of the guaranteed annual wage contract. The Journal of Political Economy, 54(1), 76-79.
  10. McLure Jr, C. E., 1996. Taxation of Electronic Commerce: Economic Objectives, Technological Constraints, and Tax Laws. Tax L. Rev., 52, 269.
  11. Miller, T., Niu, J., 2012. An assessment of strategies for choosing between competitive marketplaces. Electronic Commerce Research and Applications, 11(1), 14-23.
  12. Shi, B., Gerding, E. H., Vytelingum, P., Jennings, N. R., 2010. A game-theoretic analysis of market selection strategies for competing double auction marketplaces. In Proceedings of the 9th International Conference on Autonomous Agents and Multiagent Systems: volume 1-Volume 1, 857-864.
  13. Sohn, J. W., Lee, S., Mullen, T., 2009. Impact of misalignment of trading agent strategy across multiple markets. In Auctions, Market Mechanisms and Their Applications , 40-54. Springer Berlin Heidelberg.
  14. Zeng, Y., Guo, X., Huang, H., 2012. E-commerce tax collection and administration in China. In Information Management, Innovation Management and Industrial Engineering (ICIII). IEEE.
Download


Paper Citation


in Harvard Style

Jianya Z., L. Li D., Weigang L., Zhang Z. and Xu H. (2014). e-Commerce Game Model - Balancing Platform Service Charges with Vendor Profitability . In Proceedings of the 16th International Conference on Enterprise Information Systems - Volume 2: ICEIS, ISBN 978-989-758-028-4, pages 613-619. DOI: 10.5220/0004888406130619


in Bibtex Style

@conference{iceis14,
author={Zheng Jianya and Daniel L. Li and Li Weigang and Zi-Ke Zhang and Hongbo Xu},
title={e-Commerce Game Model - Balancing Platform Service Charges with Vendor Profitability},
booktitle={Proceedings of the 16th International Conference on Enterprise Information Systems - Volume 2: ICEIS,},
year={2014},
pages={613-619},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0004888406130619},
isbn={978-989-758-028-4},
}


in EndNote Style

TY - CONF
JO - Proceedings of the 16th International Conference on Enterprise Information Systems - Volume 2: ICEIS,
TI - e-Commerce Game Model - Balancing Platform Service Charges with Vendor Profitability
SN - 978-989-758-028-4
AU - Jianya Z.
AU - L. Li D.
AU - Weigang L.
AU - Zhang Z.
AU - Xu H.
PY - 2014
SP - 613
EP - 619
DO - 10.5220/0004888406130619