Optimizing Operating Parameters of a Dual E-Commerce-Retail Sales Channel in a Closed-Loop Supply Chain

Abstract

Currently, many consumers prefer online shopping via e-commerce platforms because of the shopping convenience and product diversity. Meanwhile, offline retailers provide retail services to cope with the competition from e-commerce platforms. Additionally, environment protection has been regarded to be equally important as economic growth in meeting the challenges of sustainable development goals. This work uses consumer utility selection theory to form the online and offline market demand functions in a dual-channel closed-loop supply chain considering consumers' e-commerce preferences and retail services. Then, we further reveal the optimal system sales channel and coordination contract to acquire good economic and ecological benefits. We find the following: 1) As in practice, consumers' e-commerce preferences and retail services simultaneously affect the purchasing and sales channels. 2) Since both consumers' e-commerce preferences and retail service quality increase as service costs decreases, the recovery rate of used products increases, which contributes to improving the ecological benefits. 3) The 'Double Marginalization' problem can reduce the operating efficiency of the decentralized system. Accordingly, we design a revenue-service cost sharing contract to solve this problem in a coordinated manner, and thus increase the economic and ecological benefits of the system. Consequently, all members can obtain profits in a win-win scenario by bargaining on the revenue rates and service costs.