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Unlocking the return insurance puzzle in e-commerce: A strategic dance between e-sellers and the e-platform

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  • Chen Zhang

Abstract

As return insurance has become a prevalent strategy, understanding the influences of the return insurance remains a critical question. This study considers a supply chain comprising an e-platform and two competing e-sellers with different product qualities under a commission contract. Eight duopoly game models were constructed to uncover optimal return insurance policies and their influences for e-sellers and the e-platform, considering the customer heterogeneity. Several key findings emerge:1) When the e-platform does not offer return insurance, retailers determine the size of the premium and choose the optimal return strategy based on a combination of the premium, the commission rates, the return compensation, and the return rate; 2) When the e-platform does not offer return insurance, retailers can lower their prices to encourage consumers to decide whether or not to purchase return insurance by themselves; 3) The e-platform that offers return insurance can change retailers’ return strategy to the detriment of both the high quality e-sellers’ profits and their own revenue.

Suggested Citation

  • Chen Zhang, 2025. "Unlocking the return insurance puzzle in e-commerce: A strategic dance between e-sellers and the e-platform," PLOS ONE, Public Library of Science, vol. 20(5), pages 1-21, May.
    • Handle: RePEc:plo:pone00:0322376
    DOI: 10.1371/journal.pone.0322376
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    References listed on IDEAS

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    1. Chen, Zhongwei & Fan, Zhi-Ping & Zhao, Xuan, 2021. "Offering return-freight insurance or not: Strategic analysis of an e-seller's decisions," Omega, Elsevier, vol. 103(C).
    2. Fan, Zhi-Ping & Chen, Zhongwei, 2020. "When should the e-tailer offer complimentary return-freight insurance ?," International Journal of Production Economics, Elsevier, vol. 230(C).
    3. Li, Yiming & Li, Gang & Tayi, Giri Kumar & Cheng, T.C.E., 2021. "Return shipping insurance: Free versus for-a-fee?," International Journal of Production Economics, Elsevier, vol. 235(C).
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