Implications of channel structure for marketing remanufactured products

Even though more and more manufacturers are selling remanufactured products through their own e-channels or subcontracting the marketing activity to third parties, there is scant literature addressing the implications of channel structures for marketing remanufactured products. To fill this void, we analyse two two-period models in which a manufacturer sells remanufactured products either: 1) through its own e-channel (Model M); 2) through a third party (Model 3P). For both these models, we identify the remanufacturing cost savings thresholds that determine the strategic choice. Our analysis suggests that the retailer can benefit from the strategy of selling remanufactured products through a manufacturer-owned e-channel but that selling remanufactured products through a third party is always detrimental to the reseller. Among other results, we find that when the remanufacturing cost savings is not too pronounced, the manufacturer makes more profit in Model 3P, but when the remanufacturing cost savings is pronounced, the opposite is true. [Received 21 April 2014; Revised 18 September 2014; Accepted 6 June 2015]