Pricing and Matching in Three-Sided On-Demand Delivery Services

On-demand delivery services allow customers to browse suppliers to choose their desired product, considering some criteria for receiving at the door. Crowd-sourced drivers pick-up orders from suppliers and deliver to customers. The three players, including customers, suppliers, and drivers, form a three-sided market where successful orders depend on all players' adequate presence. The platform balances the market towards certain profit-generating outcomes by optimally matching the orders and implementing a pricing strategy by charging customers and suppliers a fee and paying drivers a wage. A heuristic algorithm is proposed, comprising matching and pricing modules: one matches customer orders to suppliers and drivers, while the other optimizes the platform's profit by selecting pricing parameters. The findings demonstrate that the platform can influence market dynamics by strategically setting these parameters, satisfying the players' utility, and maximizing profit. The platform's success relies on regulating these parameters to attract the most players and generate profit.