Abstract:

In the omni-channel retail environment， online and offline channels are highly integrated， which provides great convenience for consumers to purchase products anytime and anywhere or return products that do not meet their own needs. While consumers are usually uncertain about the product value in the online channel they may feel disappointed when the ex-post product value is worse than their prior expectation， elation when it is better， generally， the effect of disappointment on utility is stronger than that of elation， thus， the compounding effect of disappointment and elation is captured as disappointment aversion behavior， which has a significant influence on their decision making， for example， consumers’ disappointment aversion reduces their willingness to pay， so sellers must make a lower price to attract these consumers to purchase products. Taking into account consumers’ uncertainty about online product valuations and their disappointment aversion， in response to the problem of returns in an omni-channel environment， the omni-channel retailer’ return policies options were studied， starting from the product return channels， consumer utility function and omni-channel retailer profit model with non-return， same-channel return policy， omni-channel return policy were constructed. Firstly， based on the utility obtained by consumers purchasing products through different channels， consumers' purchasing and return decisions under different return strategies are analyzed， and the omni-channel retailer's market demand， optimal pricing and optimal profit are obtained. Secondly， the omni-channel retailer's optimal profit under different return strategies is compared and analyzed， and then the optimal return strategy choice is obtained. Finally， a numerical analysis is conducted to explore the impact of consumers’ uncertainty and disappointment in product valuation on omni-channel retailer's market demand， optimal pricing and profit. The results shows that the return policies can increase the omni-channel retailer's market demand in some conditions， but the return policies are not always beneficial to the retailer. The retailer will implement the return policies only when consumers’ disappointment aversion level is high， and when the product matching rate is high and the degree of disappointment aversion level is medium， the retailer provides the same-channel return policy； when the consumers’ disappointment aversion level is high， the retailer provides the omni-channel return policy； which provides decision support for the omni-channel retailer's choice of return policy.

Key words: omni-channel, product value uncertainty, disappointment aversion, consumer returns