Whether a retailer should enter an e‐commerce platform taking into account consumer returns

Abstract

Considering consumers are increasingly shopping online nowadays and the online sales market is dominated by e‐commerce giants, traditional retailers need to choose whether to enter e‐commerce platforms. Moreover, traditional retailers need to determine whether to offer offline return services considering online return services are very popular. To address these challenges, we explore a retailer's optimal offline return strategy and channel choice of whether or not to enter a platform in the contexts of symmetric information and asymmetric information, respectively. We present conditions for the retailer to share information. Interestingly, we find that the retailer in some conditions has no motivation to improve customer satisfaction rate of offline store. Most important, we find that the retailer's channel choice depends on the magnitude of the annual service fee that is affected by offline return strategy and asymmetric information, and the offline return strategy depends on the magnitude of the average residual value of returned products.

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

“…Such a sales and return model is used extensively in JD (not self-managed), Amazon (FBM), and Pinduoduo. At the same time, the operational model is in line with the operational framework of existing research [32,69,70]. e model structure is shown in Figure 1.…”

“…For example, Ma et al [16] found the extent to which return policies affect pricing and profits in relation to retailers' unit purchase costs and market return rates. Cao et al [32] accounted for the channel choice of whether retailers should enter e-platforms and found that the choice mainly depends on the e-platform's annual service fee. From the above literature, few scholars have considered consumer returns in ESC.…”

“…Differently, the effect of consumer service preferences on the profitability of manufacturer and e-platform depends on the channel power of ESC. Additionally, the paper on salvage value and return handling cost of returned products is not limited to the choice of return strategy and pricing (unlike [11,31,32]). e impact of salvage value and return handling costs on the e-platform's service level, market demand and return volume, ESC members, and system profits is also discussed.…”

Sustainable Supply Chain Decisions under E-Commerce Platform Marketplace with Competition

“…Both above studies specify the strategic role of platform selling in eliminating the double marginalization effect, which always occurs under the conventional reselling model. Cao et al [25] examine the dilemma faced by firms who sell new and remanufactured products offline that need to consider whether to enter ecommerce platforms considering that more and more consumers are shopping online on e-commerce platforms rather than shopping offline. Yan et al [26] investigate whether and when the manufacturer should introduce the platform selling in addition to the reselling channel, they also study these problems by incorporating online spillover.…”

The bright side of third‐party marketplaces in retailing

“…Besides a traditional retail channel where the retailers resell manufacturers' products to consumers, an increasing number of retailers are introducing third-party marketplaces (3P marketplaces) for third-party sellers (3P sellers) to sell their products directly to consumers (Rochet and Tirole, 2006;Cao et al, 2019Cao et al, , 2020. For example, the retailer Newegg.com in the United States, JD.com in China, Flipkart in India, Darty in France, and Bol.com in the Netherlands all not only operate a traditional retail channel but also provide a 3P marketplace to the 3P sellers.…”