Study On Choice Of Manufacturer Rebates And The Design Of Channel Coordination Contract Under Dual-Channel

The advent of e-commerce and third-party logistics has prompted many manufacturers to redesign their traditional channel structures by engaging in direct sales. Thus, how to improve market competitiveness by selling products with dual-channel distribution becomes one of the most attractive issues for manufacturers. However, this dual-channel operational model not only aggravates the conflict between manufacturer and retailer, but also contributes to the conflict between e-channel and traditional-channel. For huge chances and profits, many manufacturers would not give up their e-channel. Instead, they do their best to find another way to cooperate with retailers to achieve win-win situation. In fact, manufacturer rebate is a good way to improve the cooperation between manufacturer and retailer. Manufacturer rebate will help to stimulate retailer’s enthusiasm, improve the operational efficiency. However, against the background of dual-channel, manufacturer rebate is influenced by the relationship between manufacturer and retailer, as well as the relationship between e-channel and traditional-channel. In concluded, the research on manufacturer rebate is more complicated in dual-channel, and this paper will pay attention to the study of manufacturer rebate in dual-channel.First of all, on the assumption of redemption cost, this paper builds the model with Stackelberg game theory. By comparing the price-transmit ratio and the manufacturer’s profit, it can be found that in direct-channel, the direct-price is inversely proportional to price-transmit ratio. Besides, if manufacturers formulate the rebate policy based on price-transmit ratio in dual-channel situation, they must know about market-cross-elasticity. Under the high market-cross-elasticity situation, retailer rebate is good for manufacturer, otherwise consumer rebate is better.Secondly, by introducing risk aversion parameters, this paper further explores how risk-aversion retailer impacts on the choice of manufacturer rebate policy under dual-channel supply chain. The study finds that if manufacturers identify retailer’s risk aversion attitude effectively, it will help to avoid over rebate compensation. In addition, either based on price-transmit ratio or profit maximization, consumer rebate is preferred than retailer rebate under high retailer risk aversion. Otherwise, retailer rebate is better. However, the thresholds under two backgrounds are different.Lastly, this paper considers the design of dual-channel coordination contract under retailer rebate and consumer rebate based on two-party-pricing contract. Research reveals that two-party-pricing contract can achieve dual-channel coordination under retailer rebate and consumer rebate. While under retailer rebate, we need to improve two-party-contract.