Retailing and ordering strategies for online apparel retailers facing bracketing purchase behaviour

Consumer behaviour is changing in the e-commerce age for apparel products. More and more consumers tend to bracket, which means they purchase multiple versions of the same product to try at home and return those that do not meet their requirements. This bracketing behaviour can increase the likelihood that consumers buy the good-fit products. However, the tsunami of returns from bracketing has become challenging for online retailers. In this paper, we analytically address this issue by developing profit-maximising models for retailers facing bracketing customers. Our contribution is to explore whether and under what conditions should retailers encourage or discourage the bracketing purchase behaviour. Whether or not bracketing is profitable for retailers depends on the bracketer proportion and retailer's reverse logistics cost. Further, we also find that while the profit is eroded because of the large number of returns, retailers should order more product to meet bracketers' demand. In addition, we generate managerial insights from the findings that help online apparel retailers convert the seemingly harmful consumer returns from bracketing into an advantage.