Abstract:

The fixed and structured commission models are the main O2O food delivery platform payment methods. Specifically， the Fixed Commission Model （FC）， dominant early in O2O food delivery， is simple and easy to operate. This model is still widely adopted in rural areas. Additionally， the fixed commission model can be further categorized into the Single Proportional Fixed Commission Model （SP） and the Multi-Proportional Fixed Commission Model （MP）. Under the SP model， the platform applies an identical commission rate across all food items. Conversely， under the MP model， the platform employs distinct commission rates for orders of varying distances， differentiating between those placed for nearby and far-off locations. The Structured Commission Model （SC）， a newly introduced commission approach by O2O food delivery platforms in recent years， takes into full consideration various key factors， including meal prices， delivery distances， and delivery time slots. Currently， this model is predominantly utilized in urban areas. The SC model primarily comprises two components： proportional commission and service commission. For the proportional commission， the platform charges a fee based on a certain percentage of the meal price. As for the service commission， it is imposed based on the sales territory and order time distribution chosen by the merchant. For O2O food delivery platforms， selecting an appropriate commission model in different business contexts is a pivotal concern that affects the platform's commercial sustainability， merchant cooperation loyalty， and the harmonious development of user consumption experiences.Based on bargaining power， O2O food merchants fall into two types： seller accept （SA） and seller design （SD）. SA merchants operate in a perfectly competitive market environment， where product prices are dictated by the market. This category specifically encompasses merchants who reference market average prices for their own pricing， franchise merchants required to adhere strictly to unified commodity circulation prices， and merchants maintaining consistent pricing both online and offline. In contrast， SD merchants， situated in a monopolistic competitive market environment， possess the capacity to set prices. Examples include merchants catering to high-end consumer groups and those employing differentiated pricing strategies across online and offline platforms.An interesting finding is that consumers' willingness to buy depends not just on meal prices but also on the meal-to-delivery fee ratio in the total price. This implies that when meal prices are equal， consumers prefer options with a lower delivery fee ratio. According to the theory of psychological accounting， this phenomenon arises because consumers categorize meal fees and delivery fees into distinct psychological accounts， leading to differing perceptions of value for the same monetary amount. Such behavior exemplifies bounded rationality in the context of O2O food delivery services. Now， how does this behavior impact the platform's selection of a commission model？ The existence of bounded rationality among consumers is postulated， characterized by sensitivity to the ratio of delivery fees to meal fees， and the extent of this impact is defined and quantified using the concept of consumer sensitivity. Against this backdrop， the most advantageous commission models are identified for the platform across various scenarios.The pricing negotiation sequence between the platform and merchants is as follows　The platform selects a commission model and sets rates. Subsequently， merchants determine the proportion of delivery fees within the total price， taking into account the platform's chosen commission model and rate. The platform's selection of the commission model and the set rate directly influence merchant profits， while merchants' decisions on delivery fee proportions， in turn， impact platform profits through demand. Consequently， a game relationship emerges， with platforms taking the lead and merchants following suit. Commission scenarios are classified by platform models and merchant types， building Stackelberg models for each. From these models， the optimal decisions and profits for both platforms and merchants are derived. Drawing on the optimal decisions and profits of the platform， a comparative analysis of the revenue performance of two commission models is conducted， as well as the influence of factors such as consumer sensitivity， order distance distribution， and order time distribution on these models.It is found by the study that　1） Commission mode selection on the platform is not impacted by merchant type， but the pricing impact of different factors varies. 2） Only with a structured commission model is merchant encouragement for global sales needed. 3） Under the structured commission model， the distribution ratio of order time periods should be reasonably set by the platform to avoid being greatly affected by the merchant's choice of sales scope.

Key words: consumer behavior, O2O food delivery platform, fixed commission model, structured commission model, pricing strategy