Abstract
In the cross-border e-commerce sector, e-commerce platforms face significant operational disruption risks and must choose between a safe, bonded-warehouse logistics mode and a risky, direct-shipping mode. This decision is complicated by the threat of supplier encroachment, where an upstream supplier can enter and compete in the channel an e-commerce platform selects. We develop a game-theoretic model to analyze an e-commerce platform’s strategic logistics mode selection and its decision to invest in predictive information to mitigate disruption risk, considering the supplier’s subsequent encroachment decision. Our analysis reveals a counter-intuitive dynamic: the threat of supplier encroachment paradoxically incentivizes the e-commerce platform to become more risk-seeking. We show that under a medium range of disruption risk, encroachment asymmetrically erodes the profitability of the safe, bonded-warehouse mode, compelling the e-commerce platform to abandon it in favor of the riskier, higher-potential direct-shipping mode. Furthermore, we investigate the e-commerce platform’s decision to invest in prediction. We find that the value of predictive information follows an inverted V-shaped pattern, peaking at moderate levels of disruption risk. Critically, we show that supplier encroachment significantly reduces this value. Because encroachment diminishes the profitability of the bonded-warehouse mode, it concurrently devalues the signal that helps identify and retreat to that mode, thus lowering the e-commerce platform’s incentive to invest in predictive information. This research offers actionable insights for managers. Managers should adopt higher-risk modes when competition reduces the profitability of low-risk options and invest in prediction only when the risk is moderate enough for predictions to meaningfully guide mode selection.
Keywords: supply chain management; cross-border e-commerce platform; logistics mode; supplier encroachment; supply chain disruption