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Return Strategies and Online Product Customization in a Dual-Channel Supply Chain

Author

Listed:
  • Rong Zhang

    (Research Center of Logistics, Shanghai Maritime University, Shanghai 201306, China)

  • Jiatong Li

    (School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China)

  • Zongsheng Huang

    (School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China)

  • Bin Liu

    (School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China)

Abstract

This paper investigates in a dual-channel supply chain which return strategy is better for the manufacturer that considers the consumers’ utility. We find that a manufacturer prefers offering a Money-Back Guarantee (MBG) as long as the net salvage value of the returned product is positive in a channel. However, the return strategy of the retailer is more affected by the return policy of another channel than the net salvage value. In order to reduce online returns, we propose the online product customization channel, and then, we examine the choice of return policy and the manufacturer’s channel selection. We show that the demand and profit of the manufacturer will increase to a certain extent when opening an online customization channel. However, compared to the case where both channels provide an MBG, the implementation of online customization may hurt the manufacturer’s profits with the increase in consumer satisfaction in indirect channels.

Suggested Citation

  • Rong Zhang & Jiatong Li & Zongsheng Huang & Bin Liu, 2019. "Return Strategies and Online Product Customization in a Dual-Channel Supply Chain," Sustainability, MDPI, vol. 11(12), pages 1-17, June.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:12:p:3482-:d:242723
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    References listed on IDEAS

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    Cited by:

    1. Ruijuan Zhao & Yihan Guo & Xiaolin Chu, 2022. "Manufacturer’s Incentive Strategies in a Dual-Channel Supply Chain with Moral Hazard: A Long-Term Perspective," Sustainability, MDPI, vol. 14(22), pages 1-21, November.
    2. Bo Zhang & Yaozhong Zhang & Peng Zhou, 2021. "Consumer Attitude towards Sustainability of Fast Fashion Products in the UK," Sustainability, MDPI, vol. 13(4), pages 1-23, February.
    3. Martínez-López, Francisco J. & Feng, Changyuan & Li, Yangchun & López-López, David, 2022. "Using instant refunds to improve online return experiences," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    4. Huanyong Zhang & Zhen Zhang & Xujin Pu & Yuhang Li, 2019. "Green Manufacturing Strategy Considering Retailers’ Fairness Concerns," Sustainability, MDPI, vol. 11(17), pages 1-22, August.
    5. Wang, Jian & He, Shulin, 2022. "Optimal decisions of modularity, prices and return policy in a dual-channel supply chain under mass customization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    6. Song-Man Wu & Felix T. S. Chan & S. H. Chung, 2022. "The influence of positive and negative salvage values on supply chain financing strategies," Annals of Operations Research, Springer, vol. 315(1), pages 535-563, August.
    7. Kateryna Lysenko-Ryba & Dominik Zimon, 2021. "Customer Behavioral Reactions to Negative Experiences during the Product Return," Sustainability, MDPI, vol. 13(2), pages 1-14, January.
    8. Gonzalo Wandosell & María C. Parra-Meroño & Alfredo Alcayde & Raúl Baños, 2021. "Green Packaging from Consumer and Business Perspectives," Sustainability, MDPI, vol. 13(3), pages 1-19, January.
    9. Qian Lei & Juan He & Fuling Huang, 2019. "Impacts of Online and Offline Channel Structures on Two-Period Supply Chains with Strategic Consumers," Mathematics, MDPI, vol. 8(1), pages 1-19, December.

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