Value of Online–Off-line Return Partnership to Off-line Retailers

2021 ◽  
Author(s):  
Elina H. Hwang ◽  
Leela Nageswaran ◽  
Soo-Haeng Cho
Keyword(s):  
Problem Definition ◽  
Third Party ◽  
Data Sets ◽  
Online Retailers ◽  
Online Shoppers ◽  
Managerial Implications ◽  
Net Revenue ◽  
Online Channel ◽  
Improved Performance ◽  
Additional Value

Problem definition: This paper examines whether and, if so, how much an online–off-line return partnership between online and third-party retailers with physical stores (or “location partners”) generates additional value to location partners. Academic/practical relevance: Online shoppers often prefer to return products to stores rather than mailing them back. Many online retailers have recently started to collaborate with location partners to offer the store return option to their customers, and we quantify its economic benefit to a location partner. Methodology: We analyze proprietary data sets from Happy Returns (which provides return services for more than 30 online retailers) and one of its location partners, using a panel difference-in-differences model. In our study, a treatment is the initiation of the return service at each of the location partner’s stores, and an outcome is the store and online channel performance of the location partner. We then explore the mechanisms of underlying customer behavior that drive these outcomes. Results: We find that the partnership increases the number of unique customers, items sold, and net revenue in both store and online channels. We identify two drivers for this improved performance: (1) the location partner acquires new customers in both store and online channels, and (2) existing customers change their shopping patterns only in the store channel after using the return service; in particular, they visit stores more often, purchase more items, and generate higher revenue after their first return service. Managerial implications: To our knowledge, we provide the first direct empirical evidence of value to location partners from a return partnership, and as these partnerships become more prevalent, our findings have important managerial implications for location partners and online retailers alike.

Responsible Sourcing Under Supplier-Auditor Collusion

2020 ◽  
Vol 22 (6) ◽  
pp. 1234-1250 ◽  
Author(s):  
Li Chen ◽  
Shiqing Yao ◽  
Kaijie Zhu
Keyword(s):  
High Risk ◽  
Local Governments ◽  
Process Quality ◽  
Problem Definition ◽  
Third Party ◽  
Risk Level ◽  
Extended Model ◽  
Global Brands ◽  
Managerial Implications ◽  
Responsible Sourcing

Problem definition: Although they enjoy low costs in sourcing from emerging economies, global brands also face serious brand and reputation risks from their suppliers’ noncompliance with environmental and labor standards. Such a supplier problem can be viewed as a process quality problem concerning how products are sourced and produced. Academic/practical relevance: Addressing this problem is a key component of many global companies’ responsible sourcing programs. A common approach is to use an audit as an auxiliary supplier screening mechanism. However, in regions with lax law enforcement, an unethical, noncomplying supplier may attempt to bribe an unethical auditor to pass the audit. Such supplier-auditor collusion compromises the integrity of the audit and weakens its effectiveness. Methodology: In this paper, we develop a game-theoretical model to study the effect of supplier-auditor collusion on the buyer’s auditing and contracting strategy in responsible sourcing, as well as various driving factors that help reduce collusion. Results: We show that the buyer’s equilibrium contracting strategy is a shutout contract that takes three different forms, depending on the collusion risk level. We also define and analyze the screening errors and social efficiency loss caused by supplier-auditor collusion. By comparing the cost versus collusion elimination trade-off between a third-party audit and an in-house audit, we offer explanations for why many global brands fully rely on third-party audits and set higher process quality requirements for suppliers located in high-risk countries. The robustness of our insights is verified by two model extensions: one involving additional supplier audit cost and the other allowing for supplier process quality improvement before audit. Managerial implications: These model insights provide useful theoretical support and baseline guidance for the current supplier audit practices in responsible sourcing. Our extended model analysis further demonstrates the importance for global brands to lobby local governments to increase collusion penalties and to promote the ethical level of the third-party auditors located in high-risk countries.

scholarly journals Motivating Supplier Social Responsibility Under Incomplete Visibility

2020 ◽  
Vol 22 (6) ◽  
pp. 1268-1286 ◽  
Author(s):  
Tim Kraft ◽  
León Valdés ◽  
Yanchong Zheng
Keyword(s):  
Supply Chain ◽  
Social Responsibility ◽  
Investment Decision ◽  
Problem Definition ◽  
Third Party ◽  
Theoretic Model ◽  
Practical Relevance ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Game Theoretic Model

Problem definition: We examine how a profit-driven firm (she) can motivate better social responsibility (SR) practices by a supplier (he) when these practices cannot be perfectly observed by the firm. We focus on the firm’s investment in the supplier’s SR capabilities. To capture the influence of consumer demands, we incorporate the potential for SR information to be disclosed by the firm or revealed by a third party. Academic/practical relevance: Most firms have limited visibility into the SR practices of their suppliers. However, there is little research on how a firm under incomplete visibility should (i) invest to improve a supplier’s SR practices and (ii) disclose SR information to consumers. We address this gap. Methodology: We develop a game-theoretic model with asymmetric information to study a supply chain with one supplier and one firm. The firm makes her investment decision given incomplete information about the supplier’s current SR practices. We analyze and compare two settings: the firm does not disclose versus she discloses SR information to the consumers. Results: The firm should invest a high (low) amount in the supplier’s capabilities if the information she observes suggests the supplier’s current SR practices are poor (good). She should always be more aggressive with her investment when disclosing (versus not disclosing). This more aggressive strategy ensures better supplier SR practices under disclosure. When choosing between disclosing and not disclosing, the firm most likely prefers not to disclose when the supplier’s current SR practices seem to be average. Managerial implications: (i) Greater visibility helps the firm to better tailor her investment to the level of support needed. (ii) Better visibility also makes the firm more “truthful” in her disclosure, whereas increased third-party scrutiny makes her more “cautious.” (iii) Mandating disclosure is most beneficial for SR when the suppliers’ current practices seem to be average.

Offline-Channel Planning in Smart Omnichannel Retailing

2021 ◽  
Author(s):  
Jian Chen ◽  
Yong Liang ◽  
Hao Shen ◽  
Zuo-Jun Max Shen ◽  
Mengying Xue
Keyword(s):  
Parameter Estimation ◽  
Real Data ◽  
Problem Definition ◽  
Mixed Integer ◽  
Planning Problem ◽  
Data Sets ◽  
Solution Approach ◽  
Planning Decisions ◽  
Managerial Implications ◽  
Offline Channels

Problem definition: Observing the retail industry inevitably evolving into omnichannel, we study an offline-channel planning problem that helps an omnichannel retailer make store location and location-dependent assortment decisions in its offline channel to maximize profit across both online and offline channels, given that customers’ purchase decisions depend on not only their preferences across products but also, their valuation discrepancies across channels, as well as the hassle costs incurred. Academic/practical relevance: The proposed model and the solution approach extend the literature on retail-channel management, omnichannel assortment planning, and the broader field of smart retailing/cities. Methodology: We derive parameterized models to capture customers’ channel choice and product choice behaviors and customize a corresponding parameter estimation approach employing the expectation-maximization method. To solve the proposed optimization model, we develop a tractable mixed integer second-order conic programming reformulation and explore the structural properties of the reformulation to derive strengthening cuts in closed form. Results: We numerically validate the efficacy of the proposed solution approach and demonstrate the parameter estimation approach. We further draw managerial insights from the numerical studies using real data sets. Managerial implications: We verify that omnichannel retailers should provide location-dependent offline assortments. In addition, our benchmark studies reveal the necessity and significance of jointly determining offline store locations and assortments, as well as of incorporating the online channel while making offline-channel planning decisions.

Disclosing Product Availability in Online Retail

2020 ◽  
Author(s):  
Eduard Calvo ◽  
Ruomeng Cui ◽  
Laura Wagner
Keyword(s):  
Information Disclosure ◽  
Problem Definition ◽  
Market Outcomes ◽  
Online Retail ◽  
Return Rates ◽  
Product Availability ◽  
Positive Effects ◽  
Online Retailers ◽  
Managerial Implications ◽  
Product Sales

Problem definition: Online retailers disclose product availability to influence customer decisions as a form of pressure selling designed to compel customers to rush into a purchase. Can the revelation of this information drive sales and profitability? We study the effect of disclosing product availability on market outcomes—product sales and returns—and identify the contexts where this effect is most powerful. Academic/practical relevance: Increasing sell-out is key for online retailers to remain profitable in the presence of thin margins and complex operations. We provide insights into how their information-disclosure policy—something they can tailor at virtually no cost—can contribute to this important objective. Methodology: We collaborate with an online retailer to procure a year of transaction data on 190,696 products that span 1,290 brands and 472,980 customers. To causally identify our results, we use a generalized difference-in-differences design with matching that exploits one policy of the firm: it discloses product availability only for the last five units. Results: The disclosure of low product availability increases hourly sales—they grow by 13.6%—but these products are more likely to be returned—product return rates increase by 17.0%. Because returns are costly, we also study net sales—product hourly sales minus hourly returns—which increase by 12.5% after the retailer reveals low availability. Managerial implications: The positive effects on sales and profitability amplify over wide assortments and when low-availability signals are abundantly visible and disclosed for deeply discounted products whose sales season is about to end. In addition, we propose a data-driven policy that exploits these results by using machine learning to prescribe the timing of disclosure of scarcity signals in order to boost sales without spiking returns.

Inducing Website Design Innovation towards Customer Loyalty

2016 ◽  
Vol 1 (3) ◽  
Author(s):  
Noorriati Din ◽  
Lennora Putit ◽  
Muhammad Naqib Mohd Noor
Keyword(s):  
Customer Loyalty ◽  
Graphic Design ◽  
Publishing House ◽  
Web Design ◽  
Social Cues ◽  
Website Design ◽  
Online Retailers ◽  
Design Attributes ◽  
Online Shoppers ◽  
International Publishing

Having an attractive and innovative web design could serve as a basis for both offline and online retailers to provide detailed information towards satisfying potential buying intention amongst online shoppers, and subsequently contribute traffic flow to the intended website. This study revealed that both graphic design and social cues attributes were found to have a positive and significant relationship with customer loyalty. Given the valuable experience to the site, the aim of this study is to investigate the extent to which website design attributes affects customer loyalty towards a particular brand or product.© 2016. The Authors. Published for AMER ABRA by e-International Publishing House, Ltd., UK. Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians) and cE-Bs (Centre for Environment-Behaviour Studies, Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, MalaysiaKeywords: Website design; social cue design; grahic design; customer loyalty

scholarly journals An Empirical Study of Holiday Season Discounts: A Comparison Between Third-Party Marketplace Sellers and Fulfilled by Walmart Sellers

SAGE Open ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 215824402110241
Author(s):  
Ya-Ling Chiu ◽  
Yuan-Teng Hsu ◽  
Xiaoyu Mao ◽  
Jying-Nan Wang
Keyword(s):  
Empirical Study ◽  
Third Party ◽  
Purchasing Decisions ◽  
Product Categories ◽  
Price Discounts ◽  
Online Retailers ◽  
Holiday Season ◽  
Over Time

When online retailers allow third-party sellers to place certain products on their platforms, these sellers become not only collaborators but also competitors. The purpose of this study is to compare the differences in price discounts between Third-Party Marketplace (3PM) sellers and Fulfilled by Walmart (FBW) sellers on Walmart.com over time. The results, based on data collected in the form of the daily prices of 54,162 products offered by Walmart during the holiday season, show that the average discount for 3PM sellers is significantly lower than that for FBW sellers. In addition, across product categories, FBW sellers had significantly higher average discounts than 3PM sellers in the electronics, housewares, and toys categories. Furthermore, the level of discount began to increase in early November and peaked around Christmas. Our findings may help retailers manage their dealings with these third-party sellers while also helping consumers to optimize their purchasing decisions.

Partial Completion as a Nonprofit Strategy

2021 ◽  
Author(s):  
Can Zhang ◽  
Atalay Atasu ◽  
Karthik Ramachandran
Keyword(s):  
Nonprofit Organizations ◽  
Service Provision ◽  
Problem Definition ◽  
Product Service ◽  
Service Portfolio ◽  
Wide Range ◽  
Partial Completion ◽  
Innovative Solution ◽  
Managerial Implications ◽  
Level 3

Problem definition: Faced with the challenge of serving beneficiaries with heterogeneous needs and under budget constraints, some nonprofit organizations (NPOs) have adopted an innovative solution: providing partially complete products or services to beneficiaries. We seek to understand what drives an NPO’s choice of partial completion as a design strategy and how it interacts with the level of variety offered in the NPO’s product or service portfolio. Academic/practical relevance: Although partial product or service provision has been observed in the nonprofit operations, there is limited understanding of when it is an appropriate strategy—a void that we seek to fill in this paper. Methodology: We synthesize the practices of two NPOs operating in different contexts to develop a stylized analytical model to study an NPO’s product/service completion and variety choices. Results: We identify when and to what extent partial completion is optimal for an NPO. We also characterize a budget allocation structure for an NPO between product/service variety and completion. Our analysis sheds light on how beneficiary characteristics (e.g., heterogeneity of their needs, capability to self-complete) and NPO objectives (e.g., total-benefit maximization versus fairness) affect the optimal levels of variety and completion. Managerial implications: We provide three key observations. (1) Partial completion is not a compromise solution to budget limitations but can be an optimal strategy for NPOs under a wide range of circumstances, even in the presence of ample resources. (2) Partial provision is particularly valuable when beneficiary needs are highly heterogeneous, or beneficiaries have high self-completion capabilities. A higher self-completion capability generally implies a lower optimal completion level; however, it may lead to either a higher or a lower optimal variety level. (3) Although providing incomplete products may appear to burden beneficiaries, a lower completion level can be optimal when fairness is factored into an NPO’s objective or when beneficiary capabilities are more heterogeneous.

Coping with Spatial Mismatch: Subsidy Design for Electric Vehicle and Charging Markets

2021 ◽  
Author(s):  
Wei Zhang ◽  
Yifan Dou
Keyword(s):  
Electric Vehicle ◽  
Service Providers ◽  
Supply And Demand ◽  
Problem Definition ◽  
Environmental Benefits ◽  
Third Party ◽  
Theoretic Model ◽  
Spatial Mismatch ◽  
The Government ◽  
Ev Charging

Problem definition: We study how the government should design the subsidy policy to promote electric vehicle (EV) adoptions effectively and efficiently when there might be a spatial mismatch between the supply and demand of charging piles. Academic/practical relevance: EV charging infrastructures are often built by third-party service providers (SPs). However, profit-maximizing SPs might prefer to locate the charging piles in the suburbs versus downtown because of lower costs although most EV drivers prefer to charge their EVs downtown given their commuting patterns and the convenience of charging in downtown areas. This conflict of spatial preferences between SPs and EV drivers results in high overall costs for EV charging and weak EV adoptions. Methodology: We use a stylized game-theoretic model and compare three types of subsidy policies: (i) subsidizing EV purchases, (ii) subsidizing SPs based on pile usage, and (iii) subsidizing SPs based on pile numbers. Results: Subsidizing EV purchases is effective in promoting EV adoptions but not in alleviating the spatial mismatch. In contrast, subsidizing SPs can be more effective in addressing the spatial mismatch and promoting EV adoptions, but uniformly subsidizing pile installation can exacerbate the spatial mismatch and backfire. In different situations, each policy can emerge as the best, and the rule to determine which side (SPs versus EV buyers) to subsidize largely depends on cost factors in the charging market rather than the EV price or the environmental benefits. Managerial implications: A “jigsaw-piece rule” is recommended to guide policy design: subsidizing SPs is preferred if charging is too costly or time consuming, and subsidizing EV purchases is preferred if charging is sufficiently fast and easy. Given charging costs that are neither too low nor too high, subsidizing SPs is preferred only if pile building downtown is moderately more expensive than pile building in the suburbs.

The Effects of Patent Extension and Take-Back Regulation on Green Pharmacy

2021 ◽  
Author(s):  
Tianqin Shi ◽  
Nicholas C. Petruzzi ◽  
Dilip Chhajed
Keyword(s):  
Pharmaceutical Industry ◽  
Social Welfare ◽  
Technical Information ◽  
Problem Definition ◽  
Theoretic Model ◽  
Innovative Company ◽  
Take Back ◽  
Starting Point ◽  
European Environmental Agency ◽  
Managerial Implications

Problem definition: The eco-toxicity arising from unused pharmaceuticals has regulators advocating the benign design concept of “green pharmacy,” but high research and development expenses can be prohibitive. We therefore examine the impacts of two regulatory mechanisms, patent extension and take-back regulation, on inducing drug manufacturers to go green. Academic/practical relevance: One incentive suggested by the European Environmental Agency is a patent extension for a company that redesigns its already patented pharmaceutical to be more environmentally friendly. This incentive can encourage both the development of degradable drugs and the disclosure of technical information. Yet, it is unclear how effective the extension would be in inducing green pharmacy and in maximizing social welfare. Methodology: We develop a game-theoretic model in which an innovative company collects monopoly profits for a patented pharmaceutical but faces competition from a generic rival after the patent expires. A social-welfare-maximizing regulator is the Stackelberg leader. The regulator leads by offering a patent extension to the innovative company while also imposing take-back regulation on the pharmaceutical industry. Then the two-profit maximizing companies respond by setting drug prices and choosing whether to invest in green pharmacy. Results: The regulator’s optimal patent extension offer can induce green pharmacy but only if the offer exceeds a threshold length that depends on the degree of product differentiation present in the pharmaceutical industry. The regulator’s correspondingly optimal take-back regulation generally prescribes a required collection rate that decreases as its optimal patent extension offer increases, and vice versa. Managerial implications: By isolating green pharmacy as a potential target to address pharmaceutical eco-toxicity at its source, the regulatory policy that we consider, which combines the incentive inherent in earning a patent extension on the one hand with the penalty inherent in complying with take-back regulation on the other hand, serves as a useful starting point for policymakers to optimally balance economic welfare considerations with environmental stewardship considerations.

Sign in / Sign up

Export Citation Format

Share Document