Platform's Trade-in Strategies Considering the Timing and Forms of Rebates

With the development of e-commerce, there are many scenarios of trade-in in online channels. According to customers’ heterogeneous preferences, platforms can choose different combinations among timing of rebates (instant, deferred, and mixed rebates) and forms of rebates (cash and gift-card rebates) to maximize their profits. We derive the platform’s optimal rebates and profits for five different scenarios: instant rebate, deferred cash rebate, mixed cash rebate, deferred gift-card rebate, mixed gift-card rebate. Furthermore, we show that the platform should choose the deferred rebate strategy when the waiting cost of impatient consumers is relatively low, otherwise, they should choose the mixed rebate strategy. When the cross-selling profitability is relatively low, the cash rebate strategy is dominant, otherwise the gift-card rebate strategy is dominant. Finally, the platform is more inclined to choose the mixed rebate strategy under the cash rebate strategy, and the deferred strategy under the gift-card rebate strategy. The findings provide guidance to platforms on how best to choose the trade-in programs.