Trade-in and resale in a platform supply chain: Manufacturer’s choice of selling strategies

Abstract

Trade-in and resale programs are increasingly adopted by retail platforms, boosting sales and generating additional profits through the resale of used products. Consequently, manufacturers selling new products on these platforms should re-evaluate their selling strategies (wholesale or agency). We construct a game-theoretic model to examine when a retail platform should introduce trade-in and resale programs and how a manufacturer should select selling strategy in response. Results indicate that under the wholesale strategy, the introduction of the trade-in and resale program always benefits the retail platform but hurts the manufacturer. However, under the agency strategy, it may positively impact both the retail platform and the manufacturer. Notably, regardless of whether the trade-in and resale program is introduced, the manufacturer should opt for the wholesale strategy if the production cost is high; otherwise, the agency strategy is preferable. Furthermore, after introducing the trade-in and resale program, the manufacturer exhibits a greater inclination towards opting for the agency strategy. This study provides valuable guidance for manufacturers and retail platforms in choosing selling strategies and implementing trade-in and resale programs.