Dual sales channel management with buyback contracts

Official URL: http://192.168.1.20/record=b1301355 (Table of Contents)

We study a dual channel structure in which a manufacturer sells its product through an independent traditional retailer channel as well as a direct online channel (i.e., the Internet). The model conceptualizes service-based competition between the channels by considering consumer channel choice. The service level of the retailer channel is evaluated with its product availability level while the service level of the direct channel is evaluated with its delivery lead time. The consumers choose between channels by considering the channels' service levels and a number of other factors such as the relative convenience of channels. We base our studies on Chen et al. (2008). We extend their study by considering a buyback contract between the manufacturer and the retailer. We compare results under dual channel, direct-channel-only and retail-channel-only structures under wholesale price and buyback contracts.