Encroachment or not? Strategy options for third-party logistics service providers considering the freshness-keeping efforts

This paper investigates whether and how third-party logistics (3PL) providers should encroach by launching their own e-commerce channel and analyzes the strategic impacts for a fresh-produce supply chain. We model a retailer-led fresh-food chain including a supplier, an offline retailer and a 3PL provider and contrast two scenarios: (A) the 3PL only provides logistics and distribution services without participating in product sales; (B) the 3PL not only provides logistics and distribution services but also directly engages in selling products through its own e-commerce platform. Equilibrium analysis and numerical experiments are conducted to compare profits, freshness-keeping effort, prices and demands. The analysis reveals three findings: (1) When the 3PL establishes its own e-commerce platform, its profit is higher than in the case without platform entry; therefore, channel encroachment is more beneficial for the 3PL provider. (2) By establishing an e-commerce platform, the 3PL not only raises the retailer’s requirements for its freshness-keeping efforts but also expands the market size, thereby stimulating demand growth. (3) By establishing their own e-commerce platforms, 3PL providers achieve Pareto improvement in the supply chain, leading to higher profitability for all participating members.