Consumer Return Policies in Omnichannel Operations

2020 ◽  
Vol 66 (12) ◽  
pp. 5558-5575 ◽  
Author(s):  
Leela Nageswaran ◽  
Soo-Haeng Cho ◽  
Alan Scheller-Wolf
Keyword(s):  
Operations Management ◽  
Policy Decisions ◽  
Return Policies ◽  
Return Policy ◽  
Return Process

We study the pricing and return policy decisions of an omnichannel retailer serving customers who differ in how they realize their uncertain valuation for a product—by inspecting in store before purchase or by purchasing online and possibly returning misfit products. Customers may return misfit products either to stores for a full refund or online as per the firm’s return policy. We model prices to be identical across channels, allow crosschannel returns, and endogenize customers’ purchase and return decisions, capturing typical features of an omnichannel setting. Our analysis helps explain why some omnichannel firms choose full refunds, whereas others charge a fee for online returns. We find that omnichannel firms with good salvage partners for online returns (e.g., Nordstrom) as well as those with more store-based customers (e.g., Macy’s) should offer full refunds. Similarly, firms are incentivized to offer full refunds for products that customers are more likely to inspect in store (e.g., Express for footwear). In contrast, firms with a significant store network and better in-store salvage opportunities (e.g., J.C. Penney) might be better off charging a fee for online returns in order to nudge customers to return in store. Finally, an omnichannel firm should be cautious both in making the return process more convenient and in improving accessibility to its stores, because these seemingly beneficial policies, if combined with a partial-refund policy, could undermine the firm’s overall profit. This paper was accepted by Vishal Gaur, operations management.

scholarly journals Pricing and Return Policies in a Competitive Market: A Consumer-Valuation Based Analysis with Valuation Uncertainties

2021 ◽  
Vol 13 (3) ◽  
pp. 1432
Author(s):  
Huifang Jiao ◽  
Xuan Wang ◽  
Chi To Ng ◽  
Lijun Ma
Keyword(s):  
Competitive Market ◽  
Two Dimensional ◽  
Competitive Markets ◽  
Return Policies ◽  
Numerical Investigations ◽  
Return Policy ◽  
Consumer Valuation ◽  
Competition Models ◽  
Monopoly Market ◽  
Duopoly Market

In this study, we develop a series of consumer-valuation-based models to investigate the pricing and return policies of the sellers in a competitive e-commerce market. Differing from the competition models in literature, a novel two-dimensional valuation structure is built, which considers the valuations of a consumer on two products and the valuation differentiation of all consumers on each product. We consider both monopoly and duopoly (competitive) markets. In each market, two models are respectively developed, one with and one without the return policies. We derive the solutions for the four models, and conduct some analytical and numerical investigations. The results show that return policy with a partial refund is always chosen by the sellers in both monopoly and duopoly markets. Return policy benefits the seller in a monopoly market, but may not benefit the sellers in a duopoly market. In the duopoly models, one seller can be considered as a monopoly seller who meets a new competitor. Our results show that the monopoly seller will reduce its price by no more than 20% when there comes a competitor, and, counter-intuitively, it will meanwhile adopt a severer return policy to the consumers.

The Victory of National Interest: Debates on the Belgian Forced Return Policy, 1998–2013

2017 ◽  
Vol 3 (1) ◽  
pp. 1-21
Author(s):  
Jef Poppelmonde ◽  
Idesbald Goddeeris
Keyword(s):  
Refugee Crisis ◽  
Host Countries ◽  
Refugee Convention ◽  
Return Policies ◽  
The Public ◽  
Return Policy ◽  
Political Conversation ◽  
The Media ◽  
The Subject ◽  
Forced Return

Based on the 1951 Refugee Convention, persons who have left their country ‘owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion’ are entitled to protection. The principle of non-refoulement provides that ‘no country shall expel or return a refugee against his or her will, in any manner whatsoever, to a territory where he or she fears threats to life or freedom’. 1 Following the increasing numbers of asylum seekers in the 1990s, host countries began to apply the Refugee Convention criteria more strictly and refused a growing number of applicants. 2 Since the summer of 2015 Europe has found itself in the middle of what is described as a ‘refugee crisis’. The crisis has brought debates about asylum, borders and return policies to the centre of the public and political conversation. A growing portion of society has called for a stricter asylum policy. This article will argue that even before this latest ‘refugee crisis’ discourses on asylum were becoming more restrictive, with a growing focus on return rather than protection. It will also show that the debates on asylum keep moving away from the definition provided in the 1951 Refugee Convention. It will do so by comparing the Belgian debates on forced return – and on asylum in general, which is inseparably connected to the subject – in the media and parliament during two periods: 1998–2001 and 2011–2013. 3 In the first section, we will elaborate on the theoretical framework of the analysis, paying attention to relevant concepts and secondary literature, as well as to the research questions and methodology. We will then discuss the most important empirical data on the debates’ topics and stances. In a third and final section, the major shifts in the debates will be analysed.

SUPPLY CHAIN COORDINATION WITH CONTRACTS GAME BETWEEN COMPLEMENTARY SUPPLIERS

2007 ◽  
Vol 06 (01) ◽  
pp. 163-175 ◽  
Author(s):  
DING DING ◽  
JIAN CHEN
Keyword(s):  
Supply Chain ◽  
Stable Equilibrium ◽  
Supply Chain Coordination ◽  
Stochastic Demand ◽  
The Other ◽  
Simple Rule ◽  
Return Policies ◽  
Return Policy ◽  
Single Period ◽  
Period Model

This paper studies a supply chain consisting of two suppliers and an assembler who also acts as a retailer in a single period model. The suppliers provide complementary modules to the assembler and the latter assembles the final products and sells them to meet a stochastic demand. Each supplier can improve his performance by offering a return policy to the assembler while the best contract depends on that offered by the other supplier. We show that the non-cooperative contracts game between the firms has a unique and stable equilibrium in which the optimal return policies happen to fully coordinate the whole channel. Moreover, the suppliers still have the rights to negotiate with the assembler independently to share their profits properly. With such properties, the suppliers are encouraged to offer return policies to the assembler by following a simple rule derived from the favorable equilibrium, which will lead to a win-win-win situation.

scholarly journals Human Rights in the EU Return Policy: The Case of the EU-Albania Relations

2012 ◽  
Vol 14 (1) ◽  
pp. 95-114 ◽  
Author(s):  
Sokol Dedja
Keyword(s):  
Human Rights ◽  
Asylum Seekers ◽  
Member States ◽  
Eu Member States ◽  
Return Policy ◽  
The Third ◽  
Protection Of Human Rights ◽  
Effectiveness And Efficiency ◽  
Return Process ◽  
The Eu

Abstract The examination of the approach of the EU return policy to Albania – a country to which the EU returns about one fifth of the total number of the third country nationals removed – demonstrates that the predominant focus of the EU return policy on the effectiveness and efficiency of returns has left little room for safeguarding the human rights of the returnees. The article finds that the return procedures of the readmission agreement that should guarantee the protection of human rights in the return process are not observed by the EU member states. There are insufficient guarantees that the reception and possible detention of returnees in Albania will offer a dignified treatment. Moreover, the readmission agreement opens the way for the return of asylum seekers to Albania in line with the ‘safe third country’ practice in the absence of conditions that ensure effective access to fair and efficient asylum procedures and protection in the country.

scholarly journals How to Implement Return Policies in a Two-Echelon Supply Chain?

2012 ◽  
Vol 2012 ◽  
pp. 1-20 ◽  
Author(s):  
Wei Hu ◽  
Jianbin Li
Keyword(s):  
Supply Chain ◽  
Demand Uncertainty ◽  
Wholesale Price ◽  
Retail Price ◽  
Modeling Framework ◽  
Optimal Response ◽  
Return Policies ◽  
Return Policy ◽  
Optimal Decisions ◽  
Valuation Uncertainty

We integrate a retailer's return policy and a supplier's buyback policy within a modeling framework. In this setting, consumers decide whether to buy and then whether to return the product, the retailer sets the retail price, quantity, and refund price, and the supplier chooses the wholesale price and buyback price. Both the demand uncertainty and consumers' valuation uncertainty are considered; consumers realize their valuations only after purchase. We discuss four scenarios for each party in the supply chain that may offer or not offer return policy. We characterize each party's optimal decisions for all scenarios and we show that the supplier's best choice is to provide buyback policy and the retailer's optimal response is to set refund price to be the same as supplier's buyback price.

scholarly journals Optimal Return Policies and Micro-Plastics Prevention Based on Environmental Quality Improvement Efforts and Consumer Environmental Awareness

Water ◽  
2021 ◽  
Vol 13 (11) ◽  
pp. 1537
Author(s):  
Dong Wang ◽  
Kehong Wang ◽  
Yujing Chen
Keyword(s):  
Quality Improvement ◽  
Environmental Protection ◽  
Environmental Quality ◽  
Environmental Awareness ◽  
Quality Improvement Effort ◽  
Return Policies ◽  
Return Policy ◽  
High K ◽  
The Government ◽  
Improvement Effort

Consumers initiating returns online may produce secondary packaging, while most of the packages are produced by plastics. The more products are returned, the more plastics are used. Existing research indicates that the plastic packages can contribute to the micro-plastics pollution of the environment. As consumer environmental awareness (CEA) improves, more and more consumers are willing to pay extra fees to change the materials of packages from plastics to others in order to protect the environment, prompting enterprises to adjust to their return policies. In this context, this paper takes environmental quality improvement effort and the environmental coefficient as decision variables, and compares the manufacturer’s optimal decisions under with and without return policy. Our results show as follows: (1) There is a positive correlation between CEA and environmental quality improvement effort and the environmental coefficient; that is, environmental quality improvement effort and the environmental coefficient increase with an increase in CEA; (2) When CEA is high (k≤τ≤d), there is a threshold for manufacturers to invest in environmental effort. However, when CEA is low (0≤τ≤k), regardless of the return policy the manufacturer implements, its profit increases with the promotion of CEA, and when the manufacturer allows consumer returns, the relationship is more obvious; (3) The manufacturer should adopt an appropriate return policy according to the changes in CEA. When CEA is low (0≤τ≤k), the manufacturer should adopt a without return policy; when CEA is high (k≤τ≤d), the manufacturer should adopt a full refund (r=p) return policy, which is the optimal profit, and increase investment in environmental protection. From the above conclusions, we suggest that the government should increase the publicity of environmental protection, consumers should establish the awareness of green consumption, and enterprises should increase investment in environmental quality improvement to achieve sustainable development.

scholarly journals Design Principles For Retail Return Policies

2021 ◽  
Author(s):  
Konstantin Loutsenko
Keyword(s):  
Decision Making ◽  
Customer Satisfaction ◽  
Consumer Behaviour ◽  
Decision Making Process ◽  
Supply Chain Optimization ◽  
Product Characteristics ◽  
Return Policies ◽  
Return Policy ◽  
Retail Organizations ◽  
Level Of Importance

Based on an analysis of prior literature on consumer behaviour and reverse logistics, this study proposes a model for the design of returns policies that includes considerations for costs, logistics requirements, and consumer behaviour. The case study investigations yielded several important findings. Product characteristic concerns seem to have a low level of importance in the decision-making process of return policy establishment. Practitioners that are responsible for creating effective return policies seem to not place great importance on either product characteristics or supply chain optimization. Using case analysis, this study explored the decision-making process of return policy creation and found that customer satisfaction and organization-specific concerns have a high level of importance in the returns creation process. The results indicate that the current models and frameworks for return policies need to be re-examined, in order to reflect the practical realities of the environment and constraints in which organizations operate. A review of the literature suggests that retailers consider a product's return policy a source of competitive advantage that can increase customer satisfaction and overall profitability. However, the existing research into returns policies focuses mainly on optimizing product flows and minimizing the financial cost of returns, rather than examining the inter-relationships between multiple constructs such as customer satisfaction, product characteristics, logistic constraints and consumer behaviour. This is problematic because it creates a disconnect between the considerations that the practitioners take into account and the considerations that are included in the current models for returns policy establishment. For retail organizations, the returns process can have a significant impact on costs and customer satisfaction due to the unique logistics costs and customer interactions in the returns process. Based on an analysis of prior literature on consumer behaviour and reverse logistics, this study proposes a research framework for the design of returns policies for retailers that considers the impacts of a specific return policy on costs, logistics requirements, and consumer behaviour. The study uses the proposed framework to identify, highlight, and catalog the different influences and considerations that retail and manufacturing organizations face during the creation of a return policy in the retail environment. The case study investigations yielded several important findings. First, product characteristic concerns seem to have a low level of importance in the decision-making process of return policy establishment. The study finds that practitioners that are responsible for creating effective return policies do not place great importance on either product characteristics or supply chain optimization. Second, this study found that most of the current models on return policy creation do not include customer satisfaction and organizational concerns. Using case analysis, this study explored the decision-making process of return policy creation in three retail organizations and found that customer satisfaction and organization-specific concerns actually have a high level of importance in the returns creation process. By using current models on return policy establishment and using empirical results, this study proposes a tentative theory by outlining the propositions for the design of a returns policy in retail organizations. The results of this study are based on organizational data as well as interviews conducted with persons who are directly involved in the returns process for their organization. The results indicate that the current models and frameworks for return policies need to be re-examined, in order to reflect the practical realities of the environment and constraints in which organizations operate.

Retail Return Policy, Endowment Effect, and Consumption Propensity: An Experimental Study

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Xianghong Wang
Keyword(s):  
Experimental Study ◽  
Consumer Behavior ◽  
Endowment Effect ◽  
Return Rate ◽  
Behavioral Theory ◽  
Return Policies ◽  
Return Policy ◽  
The Impact

Abstract The impact of retail return policy on consumer behavior has not drawn enough attention from researchers. Lenient return policies insure consumers against having regret after purchasing, so they may increase consumers' likelihood of purchasing. The behavioral theory of endowment effect suggests that consumers may then have a harder time returning purchased goods because people value objects more highly once they own them. We conducted a test of our hypotheses on how return policy and endowment effect influence purchasing tendency and return rate. This experiment proved that endowment effect did affect the returning behavior of consumers. It showed that lenient return policies significantly increased initial purchasing tendency but did not increase return rate. This suggests a potential to increase consumption by adopting lenient return policies.

Sign in / Sign up

Export Citation Format

Share Document