Whether a retailer should enter an e‐commerce platform taking into account consumer returns

Abstract Considering consumers are increasingly shopping online nowadays and the online sales market is dominated by e‐commerce giants, traditional retailers need to choose whether to enter e‐commerce platforms. Moreover, traditional retailers need to determine whether to offer offline return services considering online return services are very popular. To address these challenges, we explore a retailer's optimal offline return strategy and channel choice of whether or not to enter a platform in the contexts of symmetric information and asymmetric information, respectively. We present conditions for the retailer to share information. Interestingly, we find that the retailer in some conditions has no motivation to improve customer satisfaction rate of offline store. Most important, we find that the retailer's channel choice depends on the magnitude of the annual service fee that is affected by offline return strategy and asymmetric information, and the offline return strategy depends on the magnitude of the average residual value of returned products.