Study on Dual-Channel Supply Chain Coordination of Drop Shipping by the E-tailer

 A model of drop shipping by the e-tailer is proposed, in which the manufacturer sends its customer orders to the e-tailer and e-tailer fulfills the orders. Then a dualchannel model is established, comprising of an e-tailer and a manufacturer which owns electronic channel. And the e-tailer is a leader in Stackelberg game. The dual-channel supply chain system is inefficient after analyzing and comparing the profits of a centralized system and a decentralized system. Then a reverse revenuesharing contract is confirmed to coordinate the dual-channel supply chain. Finally, a numerical example indicates that a range of the sharingfactors can achieve the dual-channel supply chain coordination.