The bright side of online recycling: Perspectives of customer’s channel preference and competition

Abstract

Online recycling has gradually become an effective way for remanufacturers in collecting used products. Meanwhile, this new recycling business model complicates the marketing and operational decisions for firms in the reverse supply chain (RSC). This study focuses a RSC which consists of a remanufacturer and a recycler. By establishing the single and dual recycling channel RSC models, we find that the online recycling has a bright side that can effectively mitigate the double marginalization problem in the RSC; the recycler and the remanufacturer could achieve a “win–win” outcome when the customer’s acceptance of the offline recycling channel is in an intermediate level and the recycling channel competition intensity is sufficiently high. In addition, we design a modified two-part tariff contract to coordinate the channel members’ decisions and supply chain profit in the dual recycling channel RSC. Finally, we present two model extensions by considering the recycling channel cost difference and endogenous sales price, and further verify that the main results in the base model are qualitatively robust in the extensions. Our research findings provide guidance for the remanufacturers to decide whether and when to introduce the online recycling with the consideration of the impacts of customer’s channel preference and channel competition.