Service Decisions in a Two-Echelon Retailing System with Customer Returns

Radhi, Mohannad

doi:10.3390/jtaer17030062

Cited by 2 publications

(2 citation statements)

References 56 publications

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“…The consumer utility function is U 1 x p = vx p − x p − wd. This linear utility function is widely used in the operations management literature [36,37]. Let U 1 x p = 0, then…”

Section: Consumer Shopping Behavior Under Tfsmentioning

confidence: 99%

Have Your Cake and Eat It? Price Discount Programs under the Membership Free Shipping Policy in Online Retailing

Tang,

Hua,

Cheng

et al. 2024

JTAER

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Online retailers offer free shipping services, such as threshold free shipping (TFS) and membership free shipping (MFS), to promote sales and provide a better shopping experience to consumers in online retailing. Although MFS attracts more member-consumers, it encourages consumers to place more small orders than TFS, which significantly increases the operational costs of the online retailer. To address this issue, we propose two price discount policies under the MFS service, namely the limited-time discount and the threshold discount. Then, we build analytical models under these two policies to explore the impacts of offering price discounts on the retailer’s profit and consumers’ welfare. We find that no matter which discount policy is adopted, consumers are more likely to consolidate several small orders from different time periods into a big one to obtain the discount. The economies of scale generated by consumers consolidating their orders under these discount policies can help reduce online retailers’ operational costs. Therefore, regardless of any discount policy offered by the online retailer under the MFS service, consumers will place more big orders and more member-consumers are attracted, i.e., the online retailer can have its cake and eat it too. Our research findings provide decision-making insights for practitioners who offer free shipping services and price discounts to consumers in online retailing.

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“…The consumer utility function is U 1 x p = vx p − x p − wd. This linear utility function is widely used in the operations management literature [36,37]. Let U 1 x p = 0, then…”

Section: Consumer Shopping Behavior Under Tfsmentioning

confidence: 99%

Have Your Cake and Eat It? Price Discount Programs under the Membership Free Shipping Policy in Online Retailing

Tang,

Hua,

Cheng

et al. 2024

JTAER

View full text Add to dashboard Cite

show abstract

“…Some e-commerce platforms employ various incentives, such as offering lenient return policies, to indirectly increase the scale of their seller base by attracting consumers. Since online consumers cannot physically try or inspect the item they aim to buy, they may find it mismatched or unsatisfactory after receiving their package [2]. To reduce shopping risks for consumers and gain a competitive edge, platforms offer lenient return services to encourage repeat purchases, thereby attracting more users to join the platform.…”

Section: Introductionmentioning

confidence: 99%

Research on E-Commerce Platforms’ Return Policies Considering Consumers Abusing Return Policies

Liu,

2023

Sustainability

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Currently, major e-commerce platforms are competing to improve their return services, while merchants are suffering from consumers abusing return policies. We developed a dual oligopoly model consisting of two e-commerce platforms, one offering a lenient return policy and the other enforcing a stringent one, to investigate the effectiveness of lenient return policies in the presence of opportunistic consumers. We examine the impact of the proportion of opportunistic consumers, cross-network effects, gains from dishonest returns, and penalties on the scale of users and profits for both platforms. The findings indicate that: (1) As the proportion of opportunistic consumers increases, multi-homing merchants tend to be single-homing on a platform with a stringent return policy. This reduces the number of consumers on a platform with a lenient return policy and lowers the platform’s profit. Moreover, increased gains from dishonest returns worsen the situation. (2) Network effects on merchants from the consumer side significantly affect the effectiveness of lenient return policies. (3) Enforcement of penalties for dishonest returns could prevent an exodus of consumers and merchants from platforms that offer lenient return policies. However, it does not raise profits. In other words, its impact on the success of lenient return policies is limited.

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Service Decisions in a Two-Echelon Retailing System with Customer Returns

Cited by 2 publications

References 56 publications

Have Your Cake and Eat It? Price Discount Programs under the Membership Free Shipping Policy in Online Retailing

Have Your Cake and Eat It? Price Discount Programs under the Membership Free Shipping Policy in Online Retailing

Research on E-Commerce Platforms’ Return Policies Considering Consumers Abusing Return Policies

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