Integration of e‐commerce traffic supply chain and product supply chain in the era of digital economy

Abstract Considering that an online retail platform system exists not only a product supply chain (manufacturer and e‐tailer) but also a traffic supply chain (platform and e‐tailer) in the era of the digital economy, this paper mainly aims to answer the following question: How to integrate a platform system under considering these two heterogeneous supply chains? To this end, we analyze the decisions of the platform system under the decentralized decision (DD model), the integrated traffic supply chain (TF model), the integrated product supply chain (TP model), and the centralized decision (CD model). By comparing the decisions, we explore how to integrate the platform system under the TF model, the TP model, and the DD model. Our main findings include the following. First, eliminating the double marginalization of the product (or traffic) supply chain will lead to an increase in the double marginalization of the traffic (or product) supply chain. Second, integrating product or traffic supply chains separately can improve the platform system's profit, but the trade‐off of double marginalization will reduce the increase of the platform system's profit. Even if the traffic supply chain is integrated separately, the profit of the traffic supply chain will decrease. Third, we design a revenue‐sharing (RS) contract, a quantity discount (QD) contract, and a combination QD‐RS contract under the TP model, the TF model, and the DD model, respectively, to achieve the platform system integration.