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How cash-back strategy affect sale rate under refund and customers’ credit

Author

Listed:
  • Ata Allah Taleizadeh

    (University of Tehran)

  • Alireza Mahmoudzade Varzi

    (University of Tehran)

  • Alireza Amjadian

    (Kharazmi University)

  • Mahsa Noori-daryan

    (University of Tehran)

  • Ioannis Konstantaras

    (University of Macedonia)

Abstract

This paper attempts to develop a dynamic model for a chain, including online shops and customers. In this chain, online shops can sell their goods directly and through a cash-back website. Cash-back market enables customers to receive part of a paid amount in cash or as a credit after the purchase by creating a link. The effects of this website and credit assignment are not clear to us yet, but cash-back helps those sensitive about the price and those who think markets are overselling to tend to shop more. Besides, we will investigate the refund-motivating policy in this paper, which enables customers to return the merchandise in case of dissatisfaction and receive the whole or part of the money they have paid. This paper's primary purpose is to focus on the effect of credit and motivating policies explained above on the online market's benefit. In this study, we are going to consider motivational policies, in both centralized and decentralized frameworks. Also, choosing a centralized and decentralized method by an online shop is often influenced by societal variables, as shown in this paper. The results suggest that cash-back results in more profit for the retailer; moreover, customer credit leads to more customer loyalty; however, cash-back websites might even result in loss of customers' trust in case of unwise use. On top of that, refund strategy works as a back-up for customers, so if the return rate of the market gets calculated wisely, carrying out this strategy might lead to gaining more customers as well.

Suggested Citation

  • Ata Allah Taleizadeh & Alireza Mahmoudzade Varzi & Alireza Amjadian & Mahsa Noori-daryan & Ioannis Konstantaras, 2023. "How cash-back strategy affect sale rate under refund and customers’ credit," Operational Research, Springer, vol. 23(1), pages 1-69, March.
    • Handle: RePEc:spr:operea:v:23:y:2023:i:1:d:10.1007_s12351-023-00752-2
    DOI: 10.1007/s12351-023-00752-2
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    References listed on IDEAS

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    Cited by:

    1. Dawood Yahyavi & Ata Allah Taleizadeh & Park Thaichon, 2024. "National brands versus store brands: retailer fight against national brands to improve store brands via a dynamic discount pricing strategy," Operational Research, Springer, vol. 24(4), pages 1-36, December.
    2. Nabajyoti Bhattacharjee & Nabendu Sen, 2023. "A Sustainable Inventory Model to Study the Mixing and Bottling Plant of Single Item for Cost Minimization," SN Operations Research Forum, Springer, vol. 4(4), pages 1-18, December.

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