The Economics of Platforms and Marketplaces

Food delivery services showed high growth rates during the COVID-19 quarantine period. Express delivery platforms have become particularly popular. These platforms often face the problem of increased demand with limited available capacity (the number of available couriers) and heterogeneity of buyers. Also, the platforms face the question: which tool will effectively control demand and maximize profits. As a similar tool, they often use the minimum order cost (minimum basket), paid delivery, or a combination of them. The object of this study is to evaluate the effectiveness of using a minimum basket, paid delivery, and a combination of these tools as a demand control tool in terms of the platform's profit. The main goal of this work is to build a pricing model and identify a demand control tool that will maximize the service's profit, all other things being equal, taking into account the heterogeneity of customers. A model of dynamic pricing of the cost of delivery and the minimum basket was built, which evaluates the separate and joint impact of instruments on profit. The constructed model takes into account customer segmentation, customer sensitivity coefficients to the delivery price and minimum basket, and available platform capacities. The simulation results are the optimal values of the minimum basket and the delivery cost. The main conclusions obtained: (i) the maximum profit of the platform is brought by using only paid delivery; (ii) there is a positive relationship between the minimum basket and the average receipt; (iii) using the minimum basket and sharing the minimum basket and paid delivery maximizes the platform-covered consumer base.