Complimentary return-freight insurance serves the dark side: An innovative online return policy in China

E-commerce is a typical form of retail digitalization that introduces online uncertainty and product returns.To decrease the negative influence of online uncertainty,the largest Chinese e-commerce company,the Alibaba Group,invited an insurance company to develop return-freight insurance(RFI),a new kind of insurance,to compensate for consumers'losses in the event of online product returns.Complimentary RFl can increase consumer confidence in the retailer and attract more demand.Retailers who offer complimentary RFI demonstrate to consumers that their products and services are too good to incur excessive product returns.However,some low-quality online retailers can mimic competitors'behavior by offering complimentary RFI to consumers.This study aims to introduce an innovative online return policy based on RFI and to explore whether lowquality online retailers would use complimentary RFI as their return strategy to mislead consumers.Using signaling theory,we built a conceptual economic model that includes three exogenous pricing variables:RF,insurance premium,and compensation.These variables play different roles in the model because consumers cannot observe the insurance premium,but the compensation can be.The main finding of this study is that innovative complimentary RFI could be abused by low-type retailers when the premium and compensation are appropriate.Interestingly,compensation plays different roles for retailers with different product values:low-type retailers use complimentary RFI as a noise tool.When the product works for the consumer and the insurance profit is not too high,the compensation for the low-quality product should be larger than that for the highquality product,which is different from conventional wisdom.Although high-type online retailers may use complimentary RFl as a product quality signal,there is still a significant risk that nefarious elements will use it to create product quality noise.

Return Contract of Supply Chain with Fuzzy Continuous Demand

In a two-stage supply chain composed of one supplier and one retailer,the supply chain coordination mechanism in a fuzzy continuous demand environment is researched.A positive triangular fuzzy number is used to model the external market demand.Using the method of fuzzy cut sets theory,both fuzzy decentralized and centralized decision-making processes are analyzed,and another model of fuzzy return contract is proposed to help coordinate such supply chain.It is shown that in fuzzy environment there exists a unique solution of the retailer＇s optimal order quantity,the double marginalization problem can be solved by providing different tactics for wholesale pricing and return pricing,and the fuzzy expected profit of each actor can be expected to improve in the return contract.Finally,a numerical example is given to illustrate the models and the solution-seeking process.

FALSE FAILURE RETURNS： OPTIMAL PRICING AND RETURN POLICIES IN A DUAL-CHANNEL SUPPLY CHAIN

This paper aim is to examine the optimal pricing and return policies for false failure returns in a dual-channel supply chain. Four prevailing return policies in which a manufacturer both operates an E-shop and sells its product through a brick-and-mortar retailer are analyzed, i.e. （I） the manufacturer handlings E-shop＇s returns, while the retailer addresses brick-and-mortar store＇s returns （NR）; （II） the retailer tackles the whole （both E-shop＇s and brick-and-mortar store＇s） returns （ORR）; （III） the manufacturer tackles the whole returns （ORM）; and （IV） the manufacturer and the retailer are jointly responsible for the whole returns （RRM）. Firstly, the optimal pricing and return policies comparing these four scenarios under uniform-pricing strategy are presented. Our conclusions show that the ORR is an optimal return policy. Compared with the NR, consumers will get a lower product pricing under the ORR and a higher product pricing under the ORM. With regard to the RRM, the product pricing is depended on consumer preference, return-rates of the E-shop and the brick-and-mortar store. Then, the optimal pricing and return policies are analyzed under differential-pricing strategy by conducting two-stage sequential games between the manufacturer and the retailer. The findings show that if consumers in the market prefer to purchase via the E-shop, the ORR is an optimal return policy. Otherwise, the NR is the optimal return policy. Compared with the NR, the ORR retailer＇s product pricing will rely on the retailer＇s and the manufacturer＇s return-costs; the RRM retailer＇s product pricing will depend on the return-costs of the retailer and the manufacturer, the return-rates of the E-shop and the brick-and-mortar store and so on. Finally, the influences of the manufacturer and the retailer establishing a Buy-back contract are discussed. Our results illustrated that the Buy-back contract doesn＇t affect optimal pricing and return policies under both the uniform and the differential pricing strategies.