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Return policies and O2O coordination in the e-tailing age

Ruiliang Yan and Zhi Pei

Journal of Retailing and Consumer Services, 2019, vol. 50, issue C, 314-321

Abstract: Return policy is a strategic tool widely used by firms to build long-term relationship with their consumers. We develop a novel O2O (online to offline) competition model to address how the competitive return policies can be employed to coordinate the O2O distributions under the manufacturer – traditional retailer supply chain where the manufacturer opens an online channel to compete with the traditional retailer. Our results show that utilizing the revenue sharing plus profit sharing mechanisms, the manufacturer and the traditional retailer can employ different return policies for their respective channels to coordinate the O2O distributions and achieve a Pareto solution for all parties in a manufacturer - traditional retailer supply chain. Particularly when the product is becoming increasingly compatible with online sales, the value of the differential of return policies would further increase for both the manufacturer and the retailer.

Keywords: Marketing strategies; Competitive return policies; O2O competition; Channel coordination (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.jretconser.2018.07.006

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