Referral service and customer incentive in online retail supply Chain

Abstract

This paper studies an online retail supply chain that includes one referral infomediary and one retailer, in which theinfomediary provides demand referral service to retailers and incentive rebates to customers. A linear dual-channeldemand with the effect of customer incentive and horizontal service cooperation model was established, and then theoptimal policies of infomediary and retailers in centralized and decentralized supply chain were analyzed. Moreover, ahorizontal cooperation contract based on customer incentive cost as well as referral service price was developed tocoordinate the supply chain. The results revealed that the contract contributed to profit optimization of online retailsupply chain and effective win-win cooperation. Finally, we analyze the impact of rebate sensitivity and market shareon these optimal policies and illustrate the results by some numerical examples.