IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v43y2022i7p3059-3071.html
   My bibliography  Save this article

Consumer rebates from e‐commerce platforms and multichannel management of third‐party sellers

Author

Listed:
  • Aika Monden
  • Yusuke Zennyo

Abstract

The examined model includes a supplier selling goods through an online platform and an offline retailer. The examination explores how the platform's rebates to consumers alter the supplier's multichannel management and affect the retailer and consumers. A key model point is whether rebates make the supplier emphasize online or offline sales, which depends in turn on whether the platform or the supplier bears the rebate costs. Results indicate that greater rebates issued at the supplier's expense lead to emphasis on offline sales, for which double marginalization occurs. Such sales benefit the retailer, but hurt consumer surplus and social welfare.

Suggested Citation

  • Aika Monden & Yusuke Zennyo, 2022. "Consumer rebates from e‐commerce platforms and multichannel management of third‐party sellers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3059-3071, October.
  • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:7:p:3059-3071
    DOI: 10.1002/mde.3581
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.3581
    Download Restriction: no

    File URL: https://libkey.io/10.1002/mde.3581?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yuelin Shen & Sean P. Willems & Yue Dai, 2019. "Channel Selection and Contracting in the Presence of a Retail Platform," Production and Operations Management, Production and Operations Management Society, vol. 28(5), pages 1173-1185, May.
    2. Yinliang (Ricky) Tan & Janice E. Carrillo, 2017. "Strategic Analysis of the Agency Model for Digital Goods," Production and Operations Management, Production and Operations Management Society, vol. 26(4), pages 724-741, April.
    3. Zennyo, Yusuke, 2020. "Strategic contracting and hybrid use of agency and wholesale contracts in e-commerce platforms," European Journal of Operational Research, Elsevier, vol. 281(1), pages 231-239.
    4. Qiang Lu & Sridhar Moorthy, 2007. "Coupons Versus Rebates," Marketing Science, INFORMS, vol. 26(1), pages 67-82, 01-02.
    5. Lin Tian & Asoo J. Vakharia & Yinliang (Ricky) Tan & Yifan Xu, 2018. "Marketplace, Reseller, or Hybrid: Strategic Analysis of an Emerging E‐Commerce Model," Production and Operations Management, Production and Operations Management Society, vol. 27(8), pages 1595-1610, August.
    6. Demirag, Ozgun Caliskan & Keskinocak, Pinar & Swann, Julie, 2011. "Customer rebates and retailer incentives in the presence of competition and price discrimination," European Journal of Operational Research, Elsevier, vol. 215(1), pages 268-280, November.
    7. Johnson, Justin P., 2020. "The agency and wholesale models in electronic content markets," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    8. Zhang, Shichen & Zhang, Jianxiong, 2020. "Agency selling or reselling: E-tailer information sharing with supplier offline entry," European Journal of Operational Research, Elsevier, vol. 280(1), pages 134-151.
    9. Yan, Yingchen & Zhao, Ruiqing & Xing, Tiantian, 2019. "Strategic introduction of the marketplace channel under dual upstream disadvantages in sales efficiency and demand information," European Journal of Operational Research, Elsevier, vol. 273(3), pages 968-982.
    10. Anil Arya & Brian Mittendorf, 2018. "Bricks-and-Mortar Entry by Online Retailers in the Presence of Consumer Sales Taxes," Management Science, INFORMS, vol. 64(11), pages 5220-5233, November.
    11. Khouja, Moutaz, 2006. "A joint optimal pricing, rebate value, and lot sizing model," European Journal of Operational Research, Elsevier, vol. 174(2), pages 706-723, October.
    12. Chris Forman & Anindya Ghose & Avi Goldfarb, 2009. "Competition Between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live," Management Science, INFORMS, vol. 55(1), pages 47-57, January.
    13. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    14. Justin P. Johnson, 2017. "The Agency Model and MFN Clauses," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(3), pages 1151-1185.
    15. Zhang, Jianqiang, 2016. "The benefits of consumer rebates: A strategy for gray market deterrence," European Journal of Operational Research, Elsevier, vol. 251(2), pages 509-521.
    16. Anil Arya & Brian Mittendorf, 2013. "Managing Strategic Inventories via Manufacturer-to-Consumer Rebates," Management Science, INFORMS, vol. 59(4), pages 813-818, April.
    17. Shilei Yang & Charles L Munson & Bintong Chen & Chunming Shi, 2015. "Coordinating contracts for supply chains that market with mail-in rebates and retailer promotions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(12), pages 2025-2036, December.
    18. Lu, Qihui & Shi, Victor & Huang, Jiazhou, 2018. "Who benefit from agency model: A strategic analysis of pricing models in distribution channels of physical books and e-books," European Journal of Operational Research, Elsevier, vol. 264(3), pages 1074-1091.
    19. Yang, Shilei & Munson, Charles L. & Chen, Bintong, 2010. "Using MSRP to enhance the ability of rebates to control distribution channels," European Journal of Operational Research, Elsevier, vol. 205(1), pages 127-135, August.
    20. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    21. Scott M. Gilpatric, 2009. "Slippage in Rebate Programs and Present-Biased Preferences," Marketing Science, INFORMS, vol. 28(2), pages 229-238, 03-04.
    22. Choné, Philippe & Linnemer, Laurent, 2020. "Linear demand systems for differentiated goods: Overview and user’s guide," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    23. Lin Hao & Yong Tan, 2019. "Who Wants Consumers to Be Informed? Facilitating Information Disclosure in a Distribution Channel," Service Science, INFORMS, vol. 30(1), pages 34-49, March.
    24. Hao Wu & Gangshu (George) Cai & Jian Chen & Chwen Sheu, 2015. "Online Manufacturer Referral to Heterogeneous Retailers," Production and Operations Management, Production and Operations Management Society, vol. 24(11), pages 1768-1782, November.
    25. Yushi Tsunoda & Yusuke Zennyo, 2021. "Platform Information Transparency and Effects on Third‐Party Suppliers and Offline Retailers," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 4219-4235, November.
    26. Albert Y. Ha & Weixin Shang & Yunjie Wang, 2017. "Manufacturer Rebate Competition in a Supply Chain with a Common Retailer," Production and Operations Management, Production and Operations Management Society, vol. 26(11), pages 2122-2136, November.
    27. Andrei Hagiu & Julian Wright, 2015. "Marketplace or Reseller?," Management Science, INFORMS, vol. 61(1), pages 184-203, January.
    28. Wei, Jie & Lu, Jinghui & Zhao, Jing, 2020. "Interactions of competing manufacturers’ leader-follower relationship and sales format on online platforms," European Journal of Operational Research, Elsevier, vol. 280(2), pages 508-522.
    29. Shanshan Hu & Xing Hu & Qing Ye, 2017. "Optimal Rebate Strategies Under Dynamic Pricing," Operations Research, INFORMS, vol. 65(6), pages 1546-1561, December.
    30. Jay Pil Choi & Yusuke Zennyo, 2019. "Platform market competition with endogenous side decisions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 73-88, January.
    31. Xin Chen & Chung‐Lun Li & Byong‐Duk Rhee & David Simchi‐Levi, 2007. "The impact of manufacturer rebates on supply chain profits," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(6), pages 667-680, September.
    32. Yang, Liu & Dong, Shaozeng, 2018. "Rebate strategy to stimulate online customer reviews," International Journal of Production Economics, Elsevier, vol. 204(C), pages 99-107.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheng, Xianghui & Deng, Shiming & Jiang, Xuan & Li, Yanhai, 2023. "Optimal promotion strategies of online marketplaces," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1264-1278.
    2. Matsui, Kenji, 2024. "Should competing suppliers with dual-channel supply chains adopt agency selling in an e-commerce platform?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 587-604.
    3. Kittaka, Yuta & Matsushima, Noriaki & Saruta, Fuyuki, 2022. "Negative effect of price-matching policy on traditional retailers in a dual-channel supply chain with different content formats," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    4. Yushi Tsunoda & Yusuke Zennyo, 2021. "Platform Information Transparency and Effects on Third‐Party Suppliers and Offline Retailers," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 4219-4235, November.
    5. Qin, Xuelian & Liu, Zhixue & Tian, Lin, 2021. "The optimal combination between selling mode and logistics service strategy in an e-commerce market," European Journal of Operational Research, Elsevier, vol. 289(2), pages 639-651.
    6. Chen, Pingping & Zhao, Ruiqing & Yan, Yingchen & Zhou, Chi, 2021. "Promoting end-of-season product through online channel in an uncertain market," European Journal of Operational Research, Elsevier, vol. 295(3), pages 935-948.
    7. Zhen, Xueping & Xu, Shuangshuang, 2022. "Who should introduce the third-party platform channel under different pricing strategies?," European Journal of Operational Research, Elsevier, vol. 299(1), pages 168-182.
    8. Alaei, Amir Mohammad & Taleizadeh, Ata Allah & Rabbani, Masoud, 2022. "Marketplace, reseller, or web-store channel: The impact of return policy and cross-channel spillover from marketplace to web-store," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    9. Xi, Xuan & Zhang, Yulin, 2023. "The interplay between marketplace channel addition and pricing strategy in an e-commerce supply chain," International Journal of Production Economics, Elsevier, vol. 258(C).
    10. Zhou, Xiaoyang & Liu, He & Li, Jialu & Zhang, Kai & Lev, Benjamin, 2023. "Channel strategies when digital platforms emerge: A systematic literature review," Omega, Elsevier, vol. 120(C).
    11. Liang, Lunhai & Ye, Fei, 2024. "Information transparency and business mode selection in online platforms under manufacturer competition," Journal of Business Research, Elsevier, vol. 170(C).
    12. Suyuan Luo & Tsan‐Ming Choi, 2022. "E‐commerce supply chains with considerations of cyber‐security: Should governments play a role?," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2107-2126, May.
    13. Gong, Canran & Ignatius, Joshua & Song, Huaming & Chai, Junwu & Day, Steven James, 2024. "The Impact of Platform’s Information Sharing on Manufacturer Encroachment and Selling Format Decision," European Journal of Operational Research, Elsevier, vol. 317(1), pages 141-155.
    14. Peng Liu & Rong Zhang & Bin Liu, 2023. "Information sharing under agency selling in an e-commerce supply chain with competing OEMs," Operational Research, Springer, vol. 23(3), pages 1-27, September.
    15. Geng Sun & Huseyin Cavusoglu & Srinivasan Raghunathan, 2022. "Value of membership‐based free shipping in online retailing: Impact of upstream pricing model," Production and Operations Management, Production and Operations Management Society, vol. 31(11), pages 4131-4153, November.
    16. Bian, Yiwen & Wang, Hang & Yan, Shuai & Han, Xiaohua, 2024. "Platform channel strategy of selling format: Effect of asymmetric service information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 185(C).
    17. Zhou, Yu & Gao, Xiang & Luo, Suyuan & Xiong, Yu & Ye, Niangyue, 2022. "Anti-Counterfeiting in a retail Platform: A Game-Theoretic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    18. Zhang, Xiuyi & Hou, Wenhua, 2022. "The impacts of e-tailer's private label on the sales mode selection: From the perspectives of economic and environmental sustainability," European Journal of Operational Research, Elsevier, vol. 296(2), pages 601-614.
    19. Shen, Qichao & He, Bo & Qing, Qiankai, 2022. "Interplays between manufacturer advertising and retailer store brand introduction: Agency vs. wholesale contracts," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    20. Li, Jin & Wang, Haoyu & Shi, Victor & Sun, Qi, 2024. "Manufacturer's choice of online selling format in a dual-channel supply chain with green products," European Journal of Operational Research, Elsevier, vol. 318(1), pages 131-142.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:43:y:2022:i:7:p:3059-3071. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.