Managing Sales Return in Dual Sales Channel: Common Return versus Cross-Channel Return Analysis

This work examines the financial benefit in performing two kind of sales return (online sales claim because of non conformity) scenarios under dual sales channel structure. The first scenario mimics a strategy of meeting such claim through one designated online facility. The second one represents a re-fulfillment process involving a conventional store as channel counterpart (cross channel return) so that complaining customer preference might be accommodated better. In addition, two kind of pricing decision making processes are evaluated, namely Bertrand scheme for simultaneous process and Stackelberg leader scheme for leader-follower consideration one. The result shows that central warehouse and its online facility (leader) prefer to apply scenario 2 using Stackelberg leader scheme, while conventional store (follower) experiences better profit under first scenario and Bertrand scheme. However, the first scenario always performs better than the second one in the view point of total channel profit. Further fruitful management insights are also provided in the analysis section of this paper.