The vertical boundary for cross-border e-tailers' logistics operations considering transaction costs

초록

This paper examines the effect of transaction costs on the vertical boundary and performance of in-house overseas warehouse logistics operations and outsourcing. So far, the total-cost perspective for an e-commerce company (e-tailer) has only been sketched conceptually, leaving a gap to close with quantitative formulations. This paper finds following points: First, no transaction cost considered can exaggerate not only profit but also the scale of the logistics operation, with a right shift of the vertical boundary for a cross-border e-tailer. Second, with an increase in logistics capacity, the scale of an e-tailer's in-house logistics operation shrinks. Third, an increase in the service differentiation coefficient is beneficial to a cross-border e-tailer that hires a logistics integrator rather than handling logistics operations in-house. Fourth, an increase in the markup rate of in-house logistics production costs, compared to an external operation, can lead to a decrease in the vertical boundary.

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