Abstract: In this paper. the issue of coordination for two-stage online shopping supply chain consisting of one online retailer and one thirty party logistics enterprise (TPL) is investigated. Meanwhile, the demand is influenced by the retailer's sales effort level and TPL's logistics improvement effort level except price. Using the game theory, it is found that the two-part tariff contract cannot coordinate the online shopping supply chain by comparing the optimal solutions in the two cases of the centralized decision-making and decentralized decision-making. In order to effectively coordinate the online shopping supply chain, a bilateral effort cost-sharing contract is designed to by integrating the endeavors of the online retailer and the TPL. The optimal level of sales effort, optimal level of logistics effort and optimal profit of online shopping supply chain are identified. Further, it is found that the effort levels of both parties are highest than the unilateral effort cost-sharing contract and no effort cost-sharing contract when sharing coefficients satisfy certain conditions, and the profit of online shopping supply chain is also improved, especially, when μ₁=μ₂=0.5, the effort levels of both parties in the case of bilateral effort cost-sharing contract are equal the ones in the case of centralized decision-making, and the profit of both parties realize the Pareto improvement. Sensitivity analyses are conducted to examine the impacts of changes in the unit effort cost on the performance of the online shopping supply chain. Finally, numerical examples are applied to illustrate the validity of the proposed method. The research results of this paper can provide a reference for the online retailer and the TPL to make decisions to share effort cost in the customer-centered market environment.

Key words: online shopping supply chain, bilateral effort cost-sharing, two-part tariff, supply chain coordination