Strategic Interactions in Omni-Channel Retailing: Analyzing Manufacturer’s Green Contract Design and Mode Selection

Omni-channel retailers arise to address the deficiencies in consumers’ online shopping experiences; the resulting competition between such retailers and traditional online platforms presents substantial challenges for green product manufacturers. A three-level game model is established to examine a manufacturer’s green contract design (product pricing and greenness determination) and mode selection under the competition between an online platform and a new retailer providing omni-channel services to end customers. The manufacturer can select between two modes: supplying a green product to the online platform and new retailer (mode RR) or selling it directly through the online platform and reselling it to the new retailer (mode PR). Our findings indicate that, first, even if the relationship between the manufacturer and new retailer has changed from cooperation under mode RR to competition and cooperation under mode PR, the manufacturer still favors two-channel sales over single-channel sales and affects consumer channel choices to adjust market shares through mode selection. Second, regarding the impacts of the key parameters on the manufacturer, downstream e-commerce platform retailers and environment are intricate and nuanced. While raising the omni-channel service level enhances profitability in the new retailer across both modes, its environmental impacts differ significantly between them. Additionally, it can harm the online platform in some cases. Nevertheless, when the parameters fall within suitable ranges, the manufacturer and both downstream retailers have a consistent preference for improved omni-channel services under both modes. Finally, there is a significant divergence in mode preferences among the manufacturer and both downstream platform retailers. Due to the first-mover advantage, the manufacturer opts for mode RR over mode PR in most cases. Notably, within a specific range of parameters, they consistently prefer mode RR, which also proves beneficial for the environment, resulting in a Pareto optimal outcome. This proposes a concrete cooperation mechanism among the manufacturer, retailers, and consumers from quantitative insights, which can promote green products to achieve the objective of low-carbon environmental protection.