Return Policy Selection Analysis for Brands Considering MCN Click Farming and Customer Disappointment Aversion

Abstract

In order to solve the problem of separation between consumer purchase and product experience in online sales, live streaming e-commerce came into being. However, the interaction of streamers is easy to cause consumers’ impulse consumption, which leads to the soaring return rate. In this context, how to make reasonable return policies to avoid the loss is an important issue for brands. This paper studies return policy selection for brands. We mainly focus on MCN (multi-channel network) click farming and customer disappointment aversion in the situations that the return-freight insurances are paid by brands or consumers or brands and MCN jointly. Three leader-follower models with brands as leaders and platforms and MCN as followers are established. To solve the above bilevel models, we discuss the conditions under which the upper and lower models are both convex and, based on these theoretical results, we give the optimal strategies for all members. Then, through numerical experiments, we analyze the impacts of customer disappointment aversion level, MCN’s ability, commission rate, brand’s return-freight insurance purchasing ratio, and other factors on each member’s optimal decision. The results show that the return policy in the situation of return-freight insurance paid by brand is suitable for a market with the high level of customer disappointment aversion; the return policy in the situation of return-freight insurance paid by consumers is applicable to the case of low customer disappointment aversion and high commission rate; the return policy in the situation of return-freight insurance paid by brand and MCN jointly is suitable for the case of low MCN capability and can effectively restrain the click farming from MCN.

Keywords

• brand
• return policy selection
• click farming
• disappointment aversion
• leader-follower game