Consumer rebates from e‐commerce platforms and multichannel management of third‐party sellers

Abstract

The examined model includes a supplier selling goods through an online platform and an offline retailer. The examination explores how the platform's rebates to consumers alter the supplier's multichannel management and affect the retailer and consumers. A key model point is whether rebates make the supplier emphasize online or offline sales, which depends in turn on whether the platform or the supplier bears the rebate costs. Results indicate that greater rebates issued at the supplier's expense lead to emphasis on offline sales, for which double marginalization occurs. Such sales benefit the retailer, but hurt consumer surplus and social welfare.