Effects of the third-party rebate platform and information sharing on the supply chain

Consumer rebates provided by third-party rebate platforms (3RPs) are prevalent in retailing. In this study, we consider the retailer’s decision to introduce a 3RP and whether to share information with the manufacturer by considering the consumers’ sensitivity to rebates, the cost of redeeming rebates, and the proportion of redeeming rebates. We developed a game-theoretic model consisting of a manufacturer, a retailer, and a 3RP. Our main results are summarized as follows: (1) The 3RP should generate reasonable unit sale commission and rebates that can stimulate the retailer to introduce the 3RP and thus maintain the 3RP’s profitability, (2) The entry of the 3RP decreases the wholesale price and retail price but increases the consumers’ demand, (3) The 3RP causes a “win-lose” situation for the retailer and the manufacturer in the non-information sharing case. However, in the information sharing case, the 3RP benefits the manufacturer but harms the retailer, (4) The information sharing benefits the manufacturer but harms the retailer in the supply chain with and without the 3RP. Moreover, information sharing benefits the 3RP. Our analysis provides insights for firms on whether to introduce the 3RP and conditions when the retailer and the 3RP are willing to share information with the manufacturer.