Recently, the 11th China Marketing International Conference (CMIC) was held. At this conference, Lalamove cooperated with the Chinese University of Hong Kong and New York University to give a keynote report and introduced the paper "Negotiation, Efficiency and Welfare on Two-Sided Matching Platforms" ("Negotiation, Efficiency and Welfare on Bilateral Trading Platforms") Relevant content and paper abstracts were included in the conference proceedings.
As one of the most well-known academic conferences for Chinese marketing scholars, this conference focused on the theme of "Marketing in the Context of Environment, Society and Governance" for in-depth discussions. In this paper, Lalamove’s technical team cooperated with the Chinese University of Hong Kong and New York University Shanghai to study the sequential bargaining mechanism through randomized controlled experiments (the seller negotiates with the buyer in order, which can increase the buyer’s consent rate and benefit the seller) and The impact of synchronous bargaining mechanism (multiple sellers offer and negotiate prices to buyers at the same time, buyers can obtain more competitive prices) on overall welfare and market efficiency. The study found that compared with sequential bargaining, synchronous price negotiation is more beneficial to the platform, customers and drivers. Customers tend to believe that the results of simultaneous price negotiations are more reasonable and are more willing to reach an agreement, thereby improving overall market efficiency.
Currently, transactions on different types of digital platforms can be roughly divided into standard transactions (such as short-distance taxi rides on Uber, hotel reservations on Airbnb) and non-standard transactions (such as long-distance taxi rides, long-term rentals). Standard transactions are easy to price based on simple rules and market equilibrium conditions due to their small amounts and simple execution. However, non-standard transactions are often difficult to formulate price guidelines due to their large demand and large amounts. In practice, in order to facilitate such non-standard transactions, digital platforms usually adopt some form of bargaining mechanism. For example, Lalamove’s long-distance trucks and cold transport business both allow negotiated prices for vehicles. Not only limited to the logistics industry, Lalamove’s paper can actually provide some inspiration for the setting up of the bargaining mechanism of bilateral trading platforms in the future. In order to solve the problem of difficult pricing in non-standard transactions, digital platforms can consider actively designing a bargaining mechanism, and simultaneous negotiation may be a better choice than sequential negotiation.
On the Lalamove platform, intra-city freight order prices are mostly set with reference to existing industry prices, while cross-city freight allows for price negotiation. Zhang Hao, CTO of Lalamove, once pointed out that due to the complexity of cross-city routes and the lack of a good data basis, it is difficult to absolutely standardize prices in cross-city areas. Lalamove's cross-city freight business was initially priced on a large number of lines based on the "fixed price" model, which reflected the market prices of fixed lines and specific periods to a certain extent, but it could not fully meet the transaction needs of both supply and demand parties. Subsequently, Lalamove made many active explorations and adjustments in cross-city line pricing, gradually opening up the driver’s bargaining mechanism to be closer to the real freight scenario. Compared with sequential bargaining, the synchronous bargaining mechanism will be able to break the communication barriers between the two sides of the transaction to a certain extent, effectively improve the allocation efficiency of market resources, thereby improving the matching efficiency and overall welfare of both supply and demand parties on the platform.
