Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 153, Issue -, Pages -Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2021.102452
Keywords
Selling strategy; Game theory; Returns policy; Pricing; Channel selection
Categories
Funding
- Natural Sciences and Engineering Research Council of Canada
- Social Sciences and Humanities Research Council
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This paper examines the selling strategy of an internet platform retailer in the presence of customer returns, and identifies the conditions under which the supplier should offer an MBG in the direct channel. It also determines the platform retailer's optimal selling strategy and regions that achieve win-win for both supply chain members.
This paper examines the selling strategy of an internet platform retailer in the presence of customer returns. A supplier may sell its product through the platform retailer and also through its own (direct) channel. The platform retailer may either be a reseller of the supplier's product or a marketplace (charging a commission to provide platform services to the supplier, who sells the product through the platform). When the platform retailer is a reseller it offers a money-back guarantee (MBG) returns policy; when it is a marketplace, it requires that the supplier offer the MBG on sales through the marketplace. We identify the conditions under which the supplier should also offer an MBG in the direct channel. We identify the platform retailer's optimal selling strategy (as marketplace or reseller) and the associated conditions. We show that the platform retailer should choose a reselling strategy if the selling efficiencies in both channels are either significantly different or sufficiently close, and otherwise the platform retailer should choose a marketplace strategy. The regions that achieve win-win for both supply chain members are identified.
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