Consumer Return Policies in Omnichannel Operations

Nageswaran, Leela; Cho, Soo-Haeng; Scheller‐Wolf, Alan

doi:10.2139/ssrn.3046206

Cited by 8 publications

(6 citation statements)

References 5 publications

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“…We relax the assumption in Online Supplementary Appendix D, where the hassle costs might be high so that some consumers are reluctant to return the misfit product. In addition, we consider h is independent of v , which is in line with previous literature such as Shulman et al (2009), Ofek et al (2011), and Nageswaran, Cho, and Scheller‐Wolf (2020).…”

Section: Basic Modelsupporting

confidence: 56%

Optimal consumer sales tax policies for online‐offline retail operations with consumer returns

Zhang

Choi

2020

Naval Research Logistics

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Multichannel strategies are widely observed in practice. In some jurisdictions, the previously tax‐free online channel is now required to remit sales tax. Motivated by policy evolution and sales‐tax practices, we build analytical models to study the effects of sales tax on multichannel strategies and social welfare (which is defined as the overall surplus minus the negative external impact). We find that retailers prefer the online‐and‐offline channel to others when the product value is low relative to the consumer channel preference. If the offline sales tax rate is sufficiently high, the offline channel may simply function as the showroom. We also explore the optimal sales tax rate(t) that can maximize social welfare. We recognize that sales tax not only directly affects social welfare by influencing the optimal price (and service) decisions in the supply chain, but also indirectly affects social welfare through retailers' channel choice. In particular, imposing an online sales tax for low value products on small retailers only to transfer revenue from the retailers to the government; it is ineffective in increasing social welfare. We advise governments to develop sales tax policies based on consideration of channel type, product category, and the fit between the channel and product. Whereas an online tax free or a uniform tax rate fits low value products, setting different tax rates for different channels can be admissible for high value products. Counterintuitively, we also find that consumer showrooming may increase social welfare, as it reduces product returns (and the corresponding environmental impacts).

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Section: Basic Modelsupporting

confidence: 56%

Optimal consumer sales tax policies for online‐offline retail operations with consumer returns

Zhang

Choi

2020

Naval Research Logistics

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“…ere are many papers examining the consumer return in operations management [9,12,13,[37][38][39]. Many existing studies have focused on the effect of consumer return on decisions (e.g., pricing strategy) and performance of the supply chain [13,40].…”

Section: Consumer Return In Operations Managementmentioning

confidence: 99%

“…Online shopping brings convenience to consumers and benefits to online retailers, but the biggest disadvantage of online shopping channel is the inability to accurately evaluate the suitability of products before purchasing [9]. After online shopping, consumers typically check the "fit" at home, and as a result, a third of all Internet sales get returned [10,11].…”

Section: Introductionmentioning

confidence: 99%

Optimal Showroom Service Strategy and Power Structure for Retailers considering Consumer Return

Zhang

Chen

et al. 2021

Discrete Dynamics in Nature and Society

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This paper investigates the optimal showroom service strategy and power structure for online and offline retailers considering online consumer return. Combining two service strategies and three competition power structures, six models are constructed to analyze the effects of the showrooming effect and consumer return on retailers’ decisions and consumer surplus. The results show that the SS strategy is the best choice for offline retailers, and it is also an effective way to solve consumer return. Online retailers are suggested to cooperate with offline retailers to implement SS strategy and enhance the showrooming effect. Under the SS strategy, the offline-led power structure is the best choice for online retailers, but the online-led power structure is optimal for offline retailers. We also find that the supply chain and consumers are more likely to implement SS strategy and offline-led power structure. More importantly, we pinpoint that there is no incentive for retailers to implement the Nash power structure. Therefore, it is recommended to revitalize the real economy of offline retailers and implement the strategy SS effectively.

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“…Other papers study the impact from the customers' point of view: Bell et al (2017), Ansari et al (2008), and Gallino and Moreno (2014) study customer migration due to product information, and Gao and Su (2016) analyze the effect of information provided to strategic omnichannel customers on store operations. Nageswaran et al (2020) consider optimal return policies for omnichannel firms when customers can return items in physical stores that were bought online.…”

Section: Literature Reviewmentioning

confidence: 99%

Joint inventory and fulfillment decisions for omnichannel retail networks

Govindarajan

Sinha

Uichanco

2020

Naval Research Logistics

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An omnichannel retailer with a network of physical stores and online fulfillment centers facing two demands (online and in‐store) has to make important, interlinked decisions—how much inventory to keep at each location and where to fulfill each online order from, as online demand can be fulfilled from any location with available inventory. We consider inventory decisions at the start of the selling horizon for a seasonal product, with online fulfillment decisions made multiple times over the horizon. To address the intractability in considering inventory and fulfillment decisions together, we relax the problem using a hindsight‐optimal bound, for which the inventory decision can be made independent of the optimal fulfillment decisions, while still incorporating virtual pooling of online demands across locations. We develop a computationally fast and scalable inventory heuristic for the multilocation problem based on the two‐store analysis. The inventory heuristic directly informs dynamic fulfillment decisions that guide online demand fulfillment from stores. Using a numerical study based on a fictitious network embedded in the United States, we show that our heuristic significantly outperforms traditional strategies. The value of centralized inventory planning is highest when there is a moderate mix of online and in‐store demands leading to synergies between pooling within and across locations, and this value increases with the size of the network. The inventory‐aware fulfillment heuristic considerably outperforms myopic policies seen in practice, and is found to be near‐optimal under a wide range of problem parameters.

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Consumer Return Policies in Omnichannel Operations

Cited by 8 publications

References 5 publications

Optimal consumer sales tax policies for online‐offline retail operations with consumer returns

Optimal consumer sales tax policies for online‐offline retail operations with consumer returns

Optimal Showroom Service Strategy and Power Structure for Retailers considering Consumer Return

Joint inventory and fulfillment decisions for omnichannel retail networks

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