Research on the strategy of retailer's return alliance under the mode of return subsidy

WANG Xuhui, REN Xiaoxue

Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (6) : 1750-1764.

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Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (6) : 1750-1764. DOI: 10.12011/SETP2022-2775

Research on the strategy of retailer's return alliance under the mode of return subsidy

  • WANG Xuhui, REN Xiaoxue
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Abstract

In view of the new omni-channel retail return cooperative system composed of online and brick-and-mortar retailer, we introduce the return subsidy into the analysis of new omni-channel return alliance strategy management as a methods of price control. On the basis of clarifying the formation conditions and market division of different return channel combinations, we build the expected utility function of consumers and the profit function of online and brick-and-mortar retailer. And we analyze the mechanism of the effect of return subsidy on their return alliance strategies. Our main results suggest that:1) When the proportion of BORO consumers is higher than the threshold and the return subsidy cost is lower than the threshold, CPO policy is a wise choice for online retailer. That is, the value of "customer acquisition effect". 2) When the sum of cross-selling revenue and commission ratio is higher than the threshold, the brick-and-mortar retailer chooses the CPO/CFO policy. In turn, the brick-and-mortar retailer chooses the CPB/CFB policy. That is, the value of "customer supercharging effect". 3) When the proportion of BORO consumers is higher than the threshold and the return subsidy cost is lower than the threshold, online retailers and brick-and-mortar retailers are more likely to reach a return strategic alliance. Through numerical analysis, this paper analyzes the evolution rule of retailer's profit with different threshold ranges of system parameters, seeks for the balance between the resulting related operating costs and the profit growth brought by increased demand, and the applicable conditions and boundaries of different strategies adopted by online retailer and brick-and-mortar retailer. Thus, it is concluded that retail enterprises should design different return subsidy delivery strategies and return cooperation strategies according to the characteristics of consumers' return behavior, in order to provide theoretical suggestions for retail enterprises' return alliance strategies.

Key words

return subsidy / return alliance / customer acquisition effect / customer supercharging effect

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WANG Xuhui , REN Xiaoxue. Research on the strategy of retailer's return alliance under the mode of return subsidy. Systems Engineering - Theory & Practice, 2023, 43(6): 1750-1764 https://doi.org/10.12011/SETP2022-2775

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Funding

National Natural Science Foundation of China (71972030); Science Public Welfare Research Foundation of Liaoning Province (Soft Science Research Program) (2022JH4/10100046); Major Commissioned Program of Social Science Planning Foundation of Liaoning Province (L22ZD004)
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