How cash-back strategy affect sale rate under refund and customers’ credit

Ata Allah Taleizadeh, Alireza Mahmoudzade Varzi, Alireza Amjadian, Mahsa Noori-daryan and Ioannis Konstantaras ()
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Ata Allah Taleizadeh: University of Tehran
Alireza Mahmoudzade Varzi: University of Tehran
Alireza Amjadian: Kharazmi University
Mahsa Noori-daryan: University of Tehran
Ioannis Konstantaras: University of Macedonia

Operational Research, 2023, vol. 23, issue 1, No 19, 69 pages

Abstract: Abstract This paper attempts to develop a dynamic model for a chain, including online shops and customers. In this chain, online shops can sell their goods directly and through a cash-back website. Cash-back market enables customers to receive part of a paid amount in cash or as a credit after the purchase by creating a link. The effects of this website and credit assignment are not clear to us yet, but cash-back helps those sensitive about the price and those who think markets are overselling to tend to shop more. Besides, we will investigate the refund-motivating policy in this paper, which enables customers to return the merchandise in case of dissatisfaction and receive the whole or part of the money they have paid. This paper's primary purpose is to focus on the effect of credit and motivating policies explained above on the online market's benefit. In this study, we are going to consider motivational policies, in both centralized and decentralized frameworks. Also, choosing a centralized and decentralized method by an online shop is often influenced by societal variables, as shown in this paper. The results suggest that cash-back results in more profit for the retailer; moreover, customer credit leads to more customer loyalty; however, cash-back websites might even result in loss of customers' trust in case of unwise use. On top of that, refund strategy works as a back-up for customers, so if the return rate of the market gets calculated wisely, carrying out this strategy might lead to gaining more customers as well.

Keywords: Pricing; Credit; Cash-back; Online shopping; Refund (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1007/s12351-023-00752-2

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