Effect of High-Quality Thirty-Party Logistics on a Retailer With Delivery Uncertainty

Third-party logistics providers (3PLs) with low service quality often face delivery uncertainty risks, leading to decreased consumer satisfaction and resulting in refunds. Retailers can mitigate the negative effects of these uncertainties by incorporating high-quality 3PLs. However, the strategic implications of introducing high-quality 3PLs for both retailers and low-quality 3PLs remain underexplored. To address this gap, we develop a Stackelberg game-theoretic model to investigate the effect of introducing a high-quality 3PL on retailer and high-quality 3PL decision-making. Using backward induction to obtain the Nash equilibrium, we analyze strategic interactions under two scenarios: without and with the high-quality 3PL. The results show that, under certain conditions—namely, when the retailer faces a moderate proportion of first shipment with the low-quality 3PL and the transportation price of the high-quality 3PL is low, or when the proportion of first shipment with the low-quality 3PL is high—the introduction of the high-quality 3PL can create a win-win-win outcome for the retailer, the low-quality 3PL, and consumers. Furthermore, the introduction of the high-quality 3PL leads to both the higher retail price for the retailer and the higher transportation price for the low-quality 3PL. With the high-quality 3PL, the transportation price of the low-quality 3PL decreases as the transportation price of the high-quality 3PL increases. In addition, we find that when considering an uncertainty penalty for the low-quality 3PL, the introduction can also achieve a win-win-win result for all three parties. Finally, we extend other possible scenarios in the Appendix to verify the robustness of our conclusions.