期刊
NAVAL RESEARCH LOGISTICS
卷 61, 期 5, 页码 403-417出版社
WILEY-BLACKWELL
DOI: 10.1002/nav.21591
关键词
consumer returns; hassle costs; money-back guarantee; quality risk
资金
- Ministry of Science and Technology [NSC 100-2410-H-005-001-MY2]
This article compares the profitability of two pervasively adopted return policies-money-back guarantee and hassle-free policies. In our model, a seller sells to consumers with heterogeneous valuations and hassle costs. Products are subject to quality risk, and product misfit can only be observed post-purchase. While the hassle-free policy is cost advantageous from the seller's viewpoint, a money-back guarantee allows the seller to fine-tune the consumer hassle on returning the product. Thus, when the two return policies lead to the same consumer behaviors, the hassle-free policy dominates. Conversely, a money-back guarantee can be more profitable even if on average, high-valuation consumers experience a lower hassle cost than the low-valuation ones. The optimal hassle cost can be higher when product quality gets improved; thus, it is not necessarily a perfect proxy or signal of the seller's quality. We further allow the seller to adopt a mixture of these policies, and identify the concrete operating regimes within which these return policies are optimal among more flexible policies. (C) 2014 Wiley Periodicals, Inc.
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