Effect of Consumer Strategic Behavior on Online Presale Strategy

Given the effectiveness of online presale in enhancing retailers’ sustainability and efficiency, combining that consumers’ strategic behavior have a powerful influence on retailers’ presale implementation, investigating the online presale promotion model based on consumer strategic behavior is of key importance for both Academics and business. This study takes the “deposit + final” payment online promotional presale model as the research goal and establishes three different models for providing the retailers with optimal presale strategies. On the basis of proposed models, several numerical experiments to study the effects of retailers’ presales strategies on consumer returns and deposit ratio is conducted, and finally, based on the model results, the suggestions on whether to participate in presales and how to make the optimal deposit ratio decision for retailers when participating in presales is provided for both sustainability and efficiency purpose.

Managing Opportunistic Consumer Returns in Retail Operations

Retailers use lenient return policies to stimulate demand and increase revenues, as such policies help customers assess uncertain product valuations at low (or no) return cost and yield higher equilibrium prices. However, generous refunds also yield unintended consequences such as opportunistic returns, which take place when customers intentionally rent a product for short-term use. Accounting for 11% of all product returns in the United States in 2017, opportunistic returns prompt retailers to seek tactics to address adverse revenue and cost implications. We consider two alternative proposals using a price- and refund-setting newsvendor framework with two customer types: honest returners and renters. The first proposal, targeted-refunds, uses retail analytics firms to distinguish renters from honest returners and implements return policies tailored for each segment. The second proposal, menu-of-refunds, presents customers multiple price-refund pairs and lets them self-select. We compare and contrast the optimal decisions and the profit implications of both proposals with respect to two benchmark settings: one without any renters and another proposal, uniform-refunds, wherein the retailer merely reoptimizes its decisions while acknowledging that renters exist. We characterize the conditions under which the menu-of-refunds proposal separates customer types and thus matching or exceeding the performance of the targeted-refunds proposal. Furthermore, we study several alternative model specifications to confirm that our main finding concerning the effectiveness of the menu-of-refunds proposal is robust. This paper was accepted by Vishal Gaur, operations management.

Decisions of E-Commerce Supply Chain under Consumer Returns and Different Power Structures

Considering the growing phenomenon of consumer returns and channel power struggles in e-commerce supply chains (ESCs), the ESC model is constructed and its equilibrium solutions are calculated and compared. Further, the consumer utility function is constructed to explore the impact of returns and dominant enterprises on consumer utility. Based on this, the “return cost-sharing and commission readjusting” contract is designed to maximize both ESC and consumer utility. Finally, the paper validates and further analyzes conclusions through numerical simulation. The main conclusions are as follows: higher return rates and return handling costs will reduce market demand and ESC profits, while higher salvage value of returned products will have a positive impact on ESC, but the above factors will not affect the online service level under decentralized decisions. The impact of consumer’s service quality preferences on manufacturer’s profits and e-commerce platform’s profit is determined by channel power structure. The impact of return rate on consumer utility depends on two factors: the decision-making model and the hidden cost of consumer returns.