Complimentary return-freight insurance serves the dark side: An innovative online return policy in China

IF 5.4 2区 管理学 Q1 BUSINESS, FINANCE Journal of Management Science and Engineering Pub Date : 2023-06-01 DOI:10.1016/j.jmse.2022.09.002
Shidao Geng , Qingcheng Zeng , Feng Liu , Wenli Li
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Abstract

E-commerce is a typical form of retail digitalization that introduces online uncertainty and product returns. To decrease the negative influence of online uncertainty, the largest Chinese e-commerce company, the Alibaba Group, invited an insurance company to develop return-freight insurance (RFI), a new kind of insurance, to compensate for consumers' losses in the event of online product returns. Complimentary RFI can increase consumer confidence in the retailer and attract more demand. Retailers who offer complimentary RFI demonstrate to consumers that their products and services are too good to incur excessive product returns. However, some low-quality online retailers can mimic competitors’ behavior by offering complimentary RFI to consumers. This study aims to introduce an innovative online return policy based on RFI and to explore whether low-quality online retailers would use complimentary RFI as their return strategy to mislead consumers. Using signaling theory, we built a conceptual economic model that includes three exogenous pricing variables: RFI, insurance premium, and compensation. These variables play different roles in the model because consumers cannot observe the insurance premium, but the compensation can be. The main finding of this study is that innovative complimentary RFI could be abused by low-type retailers when the premium and compensation are appropriate. Interestingly, compensation plays different roles for retailers with different product values: low-type retailers use complimentary RFI as a noise tool. When the product works for the consumer and the insurance profit is not too high, the compensation for the low-quality product should be larger than that for the high-quality product, which is different from conventional wisdom. Although high-type online retailers may use complimentary RFI as a product quality signal, there is still a significant risk that nefarious elements will use it to create product quality noise.

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免费退货-运费保险服务于黑暗的一面:中国创新的在线退货政策
电子商务是零售数字化的一种典型形式,它引入了在线不确定性和产品退货。为了减少网络不确定性的负面影响,中国最大的电子商务公司阿里巴巴集团邀请保险公司开发了一种新的保险——退货-运费保险(RFI),以补偿消费者在网络产品退货时的损失。免费的RFI可以增加消费者对零售商的信心,吸引更多的需求。提供免费RFI的零售商向消费者证明,他们的产品和服务太好了,不会招致过多的产品退货。然而,一些低质量的在线零售商可以模仿竞争对手的行为,向消费者提供免费的RFI。本研究旨在介绍一种基于RFI的创新在线退货政策,并探讨低质量的在线零售商是否会使用免费的RFI作为他们的退货策略来误导消费者。利用信号理论,我们建立了一个包含三个外生定价变量的概念经济模型:RFI、保险费和赔偿。这些变量在模型中扮演着不同的角色,因为消费者无法观察到保险费,但补偿可以。本研究的主要发现是,当溢价和补偿适当时,创新的免费RFI可能被低类型零售商滥用。有趣的是,对于拥有不同产品价值的零售商,补偿扮演着不同的角色:低类型的零售商使用免费的RFI作为噪音工具。当产品对消费者有效,保险利润不太高时,劣质产品的赔偿额应该大于优质产品的赔偿额,这与传统观念不同。尽管高端在线零售商可能会使用免费的RFI作为产品质量信号,但仍然存在一个重大风险,即不法分子会利用它来制造产品质量噪音。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
Journal of Management Science and Engineering
Journal of Management Science and Engineering Engineering-Engineering (miscellaneous)
CiteScore
9.30
自引率
3.00%
发文量
37
审稿时长
108 days
期刊介绍: The Journal of Engineering and Applied Science (JEAS) is the official journal of the Faculty of Engineering, Cairo University (CUFE), Egypt, established in 1816. The Journal of Engineering and Applied Science publishes fundamental and applied research articles and reviews spanning different areas of engineering disciplines, applications, and interdisciplinary topics.
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