Multi-channel retailer’s financing strategy in a green supply chain: Third-party platform credit financing versus bank credit financing

Abstract

With the rapid development of third-party platforms, more and more retailers sell their green products on the third-party platform in addition to their offline channel. The additional demand generated from the third-party platform may impose greater capital pressure on the retailer. In response, some third-party platforms offer financing service to capital-constrained retailers sell on them. Therefore, we establish a Stackelberg game-theoretic model where a manufacturer sells green products to a capital-constrained retailer which has an offline channel and a third-party platform channel. Two financing strategies are considered: bank credit financing (BF) and third-party platform credit financing (TF). The manufacturer as the leader first determines the wholesale price and the lender (bank or the third-party platform) then sets an interest rate. The retailer finally decides the retail price. Our theoretical analysis shows that for the manufacturer, retailer and third-party platform, TF strategy is better than BF strategy. That is, TF strategy is a win-win strategy. Specifically, under the TF strategy, the retail price or the interest rate are lower compared to the BF strategy, while the wholesale price under TF is higher. Additionally, our finding shows that the revenue sharing rate has no impact on the manufacturer’s wholesale price decision under TF strategy, whereas under the BF strategy, the wholesale price decreases as the revenue sharing rate increases. We also find that the retail price increases with the revenue sharing rate under BF, but decreases under TF strategy.