Customer Returns Model In A Dual-channel Supply Chain

The concept that the customer is the most important part of the business has been treated by business managers as a treasure. Customer returns phenomenon has been more and more common in all walks of life. Now the market is a buyer’s market. It would affect the short-term sales profit of the company or even affect the reputation of the company greatly in a long duration and even cause the enterprise bankruptcy if companies allow the customer return problem becomes more and more rampant. Customer returns as an after-sales service problem, not only affect after-sales service level, but also affect reverse logistics in supply chain and the enterprise inventory management, and even affect the order management. Enterprises must strengthen the management of customer returns from now on, face and understand the problem positively and formulate a relative sophisticated customer returns management system, and maximize the value of the return and minimize the cost of the return. In order to win customer satisfaction and enhance customer stickiness, all kinds of brand-positioning company in all walks of life are trying to provide the loose customers return policy and actively deal with customer returns-related problem.The rapid development of e-commerce provides the customer and the enterprise the technical conditions of collecting each other. This opens up new market and sales channel, that’s to say, the network direct marketing, for enterprises specially the manufacturers. And also it provides a new way of shopping for customers, and more channels to choose, breaking the monopoly profits of retailers, exacerbating the degree of competition in the market, changing the traditional single channel coordination of supply chain management mode. E-commerce allows manufacturers to sell products online directly and more flexibly, and also adopt flexible after-sales service strategy. The rapid development of logistics industry makes the forward logistics and reverse logistics very convenient. So, now market participators not only could continue to sell its goods through traditional retailer channel, but also sell its products directly through e-commerce sites. So, the problem of dual-channel supply chain competition and coordination comes out in this paper.Customer returns policy is often employed to encourage customer purchase more aggressively. In this paper, a customer returns model in a dual-channel supply chain is proposed where customer can return the purchased product to the retailer or the manufacturer. We obtain the equilibrium of selling prices and refund prices in the centralized and decentralized dual-channel supply chain. Our mathematic analysis show that:1) in the centralized scenario, the retailer and the manufacturer will charge higher selling prices when they offer return policy, and the demand for each channel increases, which results in higher profit;2) given the same wholesale price, the price and refund price of the direct channel in two scenarios are the same, respectively.