A Review: Pricing Strategy and Pricing Determinant Factors in Sharing Logistics

Abstract

There is a significant change in our current business practices where the change leads the

mainstream business practice into a new concept: Sharing Economy. In this research, the sharing

economy will be narrowed down to a specific topic called sharing logistics. This research aims:

(1) to identify the determinants that are perceived as a priority by customers in logistics service,

(2) to explore the pricing method suitable for sharing logistic companies based on priority

determinants, which are previously identified. To arrive at the objectives of the research, many

works of literature were reviewed related to the matter of determinants and pricing strategies in

the logistics service industry and related to the concept of sharing economy. Primary data was

also collected through an interview with the expert of the leading logistic service company in

Indonesia. In addition, the analytical hierarchy process (AHP) was conducted as well to find the

proportion that represents determinants' priority based on the perspective of the customers of

logistic service providers and academic researchers. Hopefully, by identifying the determinants

that are perceived as a priority by customers in logistics service, and with its appropriate pricing

method, companies that run their business in logistics sharing will have a proper pricing method

guideline in the first place.

Keywords: Sharing economy, sharing logistics, pricing method, determinants of logistics service,

analytical hierarchy process

Introduction

This research expands the literature review related to logistics sharing by adding

knowledge related to the determinant of logistics service and the pricing strategy in small and

medium enterprises. The review proposed to help companies that are participating in sharing

logistics practices to be able to develop their own pricing method. This review aims at two major

objectives: first, to identify the determinants that are perceived as a priority by customers in

logistics service. Second, to explore the pricing method to be proposed for sharing logistics

companies based on priority determinants that have been previously identified.

Methodology

Researchers define customer determinants related to logistics services. It is very

important to study this as it influences corporate decision making. These determinants can be

obtained from experts, the literature, or the customers themselves. The respondent was asked by

the researchers to choose her two determinants to compare and rank based on their importance in

the questionnaire. Respondents were required to rate the relevance of one endpoint compared to

another on a scale of 1 to 9. The number 1 indicates that both endpoints are equally important,

and the number 9 indicates that one endpoint is much more important than the other. 
Result and Discussion

To conclude, this research identified some of the determinants in logistics service that are

based on customers' priorities, such as order accuracy/perfect order, picking or shipping

accuracy, damage zero delivery on-time delivery, waiting time, information accuracy,

document/invoicing accuracy, network distance, and volume/size. The priorities mentioned state

that the customers do not focus on the primary services but based on the quality of the services.

For that reason, services may assume that customers are seeking the benefits of the product.

That’s why sharing logistic companies can come up with an effective pricing method that is

Value-based. By identifying the determinants and appropriate pricing method sharing logistics

companies will surely run and have a proper pricing guideline in doing business.

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