Abstract: Based on the coexistence of traditional retail channel and direct Internet channel within the supply chain in E-commerce, this paper develop s a model under promotion-price sensitive demand, promodon -incentive compensation and so on, analyzes and compares the optimal promotion investment, incentive compensation investment and pricing strategies in the integrated and decentralized manners of dual-channel supply chain and studies the contract design on coordination problem of the above supply chain.It demonstrates that the two-part tariff alone cannot achieve the dual-channel supply chain coordination while the suitable two-part tariff contract combined with a promotion-level subsidy contract can do and a "win-win" situation can be realized and then the manufacturer can provide infinite such combined contracts for coordination of dual-channel supply chain.

Key words: supply chain coordination, dual-channel, incentive compensation, contract design.