Optimal return shipping insurance policy with consumers' anticipated regret

• 成果类型: Article
• 署名作者: Li, Yiming; Li, Gang; Pan, Xiajun Amy
• 署名单位: Xi'an Jiaotong University; Xidian University; State University System of Florida; University of Florida; Xi'an Jiaotong University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.14031
• 发表日期: 2023
• 页码: 3209-3226
• 关键词: anticipated regret; behavioral economics; pricing; product returns; return shipping insurance

摘要

We study return shipping insurance (RSI) policies prevalent on platforms such as JD.com and Taobao.com. Retailers on those platforms can purchase and provide RSI for consumers (RRSI) or offer an option for consumers to buy RSI themselves (CRSI). With either RSI, consumers will be partially compensated by an insurer for their shipping fees associated with product returns. As the consumers' uncertainty about product fit is realized only after purchase, their decisions whether to purchase CRSI may lead to postpurchase regret. Considering these anticipated regret behaviors, we investigate the optimal RSI policy for a monopolistic online retailer and an insurer. We show that the retailer offers RRSI only if the retailer's return handling cost is relatively low and consumers' return shipping cost is in an intermediate range; otherwise, the consumers' strong propensity for uninsured regret may stimulate them to purchase CRSI. Under the optimal RRSI policy, the retailer always charges a higher product price than under no RSI, and surprisingly the consumer demand could expand. In contrast, under the optimal CRSI policy, the retailer always sets a lower product price, but resulting in consumer demand shrinkage. Counterintuitively, CRSI may become a win-win-win policy for the retailer, insurer, and consumers.