General IS Topics
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Paper Number
2584
Paper Type
Completed
Description
One of the factors that has contributed to a steady growth in retail sales through online channels is retailers' adoption of generous return policies. Multichannel retailers like Walmart typically adopt two different policies to allow their customers to return the online purchases: mail-in return policy and in-store return policy. In this paper, we consider a market in which a multichannel retailer competes with an e-tailer. Using a game-theoretic framework, we study the impact of the consumer showrooming on the multichannel retailer's return policies and the product assortment carried at its BM store. We show two types of consumer showrooming behaviour: first instance showrooming and second instance showrooming. A multichannel retailer loses consumers due to the first instance showrooming and gains consumers due to the second instance showrooming. The tradeoff between the two types of showrooming leads to a larger, equal or smaller product assortment in the in-store return policy compared to the mail-in return policy. We also find that the in-store return policy always benefits the multichannel retailer.
Recommended Citation
Tang, Ping; Mehra, Amit; and Mandal, Prasenjit, "The Effect of Customer Showrooming on Return Policy and Product Assortment for Multichannel Retailers" (2021). ICIS 2021 Proceedings. 12.
https://aisel.aisnet.org/icis2021/gen_topics/gen_topics/12
The Effect of Customer Showrooming on Return Policy and Product Assortment for Multichannel Retailers
One of the factors that has contributed to a steady growth in retail sales through online channels is retailers' adoption of generous return policies. Multichannel retailers like Walmart typically adopt two different policies to allow their customers to return the online purchases: mail-in return policy and in-store return policy. In this paper, we consider a market in which a multichannel retailer competes with an e-tailer. Using a game-theoretic framework, we study the impact of the consumer showrooming on the multichannel retailer's return policies and the product assortment carried at its BM store. We show two types of consumer showrooming behaviour: first instance showrooming and second instance showrooming. A multichannel retailer loses consumers due to the first instance showrooming and gains consumers due to the second instance showrooming. The tradeoff between the two types of showrooming leads to a larger, equal or smaller product assortment in the in-store return policy compared to the mail-in return policy. We also find that the in-store return policy always benefits the multichannel retailer.
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