The last mile delivery strategy: relay station service or delivery at home?

Abstract The surge in e‐commerce retailing and the prosperity of urban life led to a growing demand for last‐mile delivery services. With the rise of the platform economy, emerging third‐party delivery platforms (e.g., Cainiao Station) have gained popularity. Couriers can leave parcels at a station near the consumer's residence. Compared to delivery at home, the relay station service (RSS) enhances delivery capacity but also incurs additional costs. In our study, we aim to study the pricing and service mode strategies of last‐mile service providers under different competitive scenarios. We construct queuing game models to analyze the mode and pricing decisions of last‐mile service providers under monopoly and competition scenarios. The results reveal that in the monopoly case, there exists a threshold of the relay fee, below which the service provider chooses RSS. The threshold increases in the potential demand and decreases in the probability that consumers will stay in their residences. In the case of duopoly competition with a relatively low relay fee, both competing service providers choose the same mode when the potential demand is either abundant or scarce. However, when the demand is moderate, adopting differentiated modes yields higher profits. This offers fresh insights for providers on competitive positioning, indicating the possibility of targeting specific market segments through differentiated service modes.