A study on omnichannel retailers' return strategies considering showroom and consumer preference behavior

Abstract

To address omnichannel retailers' return challenges, considering consumers' brand and channel preferences. Four subgame models for retailers' Experience-in-Store-and-Buy-Online (ESBO) return strategies in a double oligopoly market are developed. Using an optimization model and inverse induction method, equilibrium strategies under different conditions are determined. Finally, simulation analyzes parameter sensitivity and equilibrium strategies. Findings show that when consumers' brand preference is low, the (Y,Y) subgame is the unique equilibrium solution, but profits do not significantly increase and are always lower than the (N,N) subgame, leading to a Prisoner's Dilemma. With a clear brand preference, both retailers always obtain the maximum profit under the (Y,Y) subgame. In markets with a high proportion of omnichannel consumers and a large number of high-cost-to-store consumers, the party implementing the ESBO strategy benefits more in a fiercely competitive market, while the profit situation of the party not implementing the ESBO strategy is less optimistic.