Optimizing cooperation mechanisms for augmented reality (AR) services: Balancing product returns, pricing, and customer satisfaction

Abstract

Augmented Reality (AR) enhances user interaction with digital overlays, improving product marketing. This study investigates the interplay between AR services provided by influencers and product returns, focusing on two cooperation mechanisms: the agency mechanism (collaboration with suppliers) and the self-built store mechanism (independent operations with suppliers). Our research delves into the challenge of product returns and explores cooperation mechanisms between product suppliers and influencers utilizing AR services. The research results first show that higher customer satisfaction and providing AR services tend to increase product price and lead to higher return rates, while lower customer satisfaction and the absence of AR services result in lower product price but higher customer retention. Secondly, under the agency mechanism, when return loss costs are higher and customer satisfaction is lower, influencers provide more AR services. In the customer keep phenomenon, influencers should consider the wholesale price level, in addition to the unit management cost when deciding on high-quality AR services. Thirdly, under the agency mechanism, influencers choose to provide AR services only when customer satisfaction is very low but refrain in the self-built store mechanism. In addition, when customer satisfaction is higher, influencers can consider providing AR services and accepting returns. Furthermore, from the perspective of influencers, the agency mechanism is more advantageous when AR services are provided, while the self-built store mechanism is optimal without AR services under low satisfaction. High satisfaction consistently favors the agency mechanism.