Pricing Decision of E-Commerce Supply Chains with Return and Online Review of Product Quality

The online review function helps consumers grasp more real product information and reduce the possibility of returning, but it may also damage firms’ reputations or profits. However, few studies considered the relationship between online reviews and consumer returns. Based on this, we develop an e-commerce supply chain(E-SC) game model consisting of a single manufacturer and a single e-platform, aiming to explore the relationship between consumer returns and online reviews and to analyze the impact on both the decision-making of E-SC members and their profits. We find that there is a negative relationship between consumer returns and online reviews of product quality, and consumer returns make the pricing decisions in the two scenarios of yes/no online reviews move toward two different directions. Only when the online review is positive and higher than a certain threshold will it have a positive impact on sales and E-SC members’ profits. Finally, we design a new “commission joint returns and quality improvement costs sharing” contract to optimize the decentralized model with online reviews, and we find that the higher the accuracy of product information, the less conducive the contract applied to E-SC.

Decision and Coordination of an E-commerce Supply Chain Considering Returns and Network Externalities

Considering the large number of returns in online sales and the network externalities of e-platforms,we develop a decentralized model and a centralized model to explore the impacts of returns and network externalities on e-commerce supply chain(ECSC)decisions.We show that in the decentralized model,the service level,price,market demand,and ECSC members’profits increase with the network externality strength.However,the service level and price increase,while the market demand and ECSC members’profits decrease with the product return rate.The centralized model is the optimal operating mode when it is properly coordinated.We design the“commission and return cost-sharing”contract to optimize ECSC,in which the proportion of the e-platform’s sharing of the return handling cost is exactly equal to the proportion of the system profit after coordination.Based on the decentralized model,we develop two extended models in which we endogenize the impacts of the service level and return rate on the network externality strength.Through comparisons between the extended and decentralized models,we show that high-quality service can improve ECSC’s profitability,while a high return rate hurts its economic performance.