Referral service and customer incentive in online retail supply Chain

 

Y. G. Chen*¹, W. Y. Zhang², S. Q. Yang³, Z. J. Wang⁴ and S. F. Chen⁵

 

^1,2,3,4 School of Information, Zhejiang University of Finance and Economics, Hangzhou, China. *chenyg@zufe.edu.cn

⁵ School of Economics and Management, Zhejiang Normal University. Jinhua, China.

 

ABSTRACT

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

Keywords: online retail supply chain, infomediary, customer incentive, demand referral, contract coordination.

 

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Acknowledgements

This research was partially supported by the Zhejiang Provincial Natural Science Foundation of China under Grant No. LY12G02006, the Humanity and Social Science Youth Foundation of the Ministry of Education of the Republic of China under Grand No. 11YJC630028 and 13YJC630203, and the Philosophy and Social Science Research Project of Zhejiang Province under Grant No. 13NDJC054YB. This work was also supported by the Key Soft Science Research Project of Zhejiang Province under Grant No. 2013C25045 and the National Natural Science Foundation of China under Grant No. 51375429 and 71271188.

 

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