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Article

Pricing of Complementary Products in Online Purchasing under Return Policy

1
School of Industrial Engineering, College of Engineering, University of Tehran, Tehran 1417466191, Iran
2
Department of Social and Economical Systems, College of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran 1417466191, Iran
3
Tecnologico de Monterrey, School of Engineering and Sciences, Ave. Eugenio Garza Sada 2501, Monterrey 64849, NL, Mexico
4
Department of Industrial Engineering, Faculty of Engineering, Kermanshah Branch, Islamic Azad University, Kermanshah 67146, Iran
*
Author to whom correspondence should be addressed.
Academic Editor: Danny C.K. Ho
J. Theor. Appl. Electron. Commer. Res. 2021, 16(5), 1718-1739; https://doi.org/10.3390/jtaer16050097
Received: 24 February 2021 / Revised: 25 May 2021 / Accepted: 26 May 2021 / Published: 2 June 2021
(This article belongs to the Special Issue The New Era of Digital Marketing)
In online purchasing, customers may return products due to dissatisfaction with the quality of the product, and receive a refund based on the return policy, which is determined by online distributors. Online distributors can offer generous policies to attract more customers, but at the cost of reducing total profits. In this paper, the effect of the pricing and quality of complementary products (products sold together with other items) in online selling under the return policy is investigated. For this purpose, a mathematical model is developed to obtain optimal values for selling price, refund amount, and quality of products. Based on analytical results, a solution algorithm is proposed to solve the numerical examples and perform sensitivity analysis. Findings reveal that, while increasing the sensitivity of demand with respect to the refund amount, the price, quality, and refund on returned products should be increased. In addition, the online distributor should increase the quality of products when customers are more sensitive to the quality of products. Among other results, the selling price is shown to be negatively affected by demand elasticity with respect to price. In this situation, the online distributor should reduce the quality level and the refund amount for returned products to avoid a sharp decline in profit. In addition, when the quality cost is high, the price and quality should be decreased and the refund amount unchanged. View Full-Text
Keywords: online purchasing; pricing; return policy; complementary products; e-commerce online purchasing; pricing; return policy; complementary products; e-commerce
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MDPI and ACS Style

Taleizadeh, A.A.; Beydokhti, S.R.; Cárdenas-Barrón, L.E.; Najafi-Ghobadi, S. Pricing of Complementary Products in Online Purchasing under Return Policy. J. Theor. Appl. Electron. Commer. Res. 2021, 16, 1718-1739. https://doi.org/10.3390/jtaer16050097

AMA Style

Taleizadeh AA, Beydokhti SR, Cárdenas-Barrón LE, Najafi-Ghobadi S. Pricing of Complementary Products in Online Purchasing under Return Policy. Journal of Theoretical and Applied Electronic Commerce Research. 2021; 16(5):1718-1739. https://doi.org/10.3390/jtaer16050097

Chicago/Turabian Style

Taleizadeh, Ata A.; Beydokhti, Shima R.; Cárdenas-Barrón, Leopoldo E.; Najafi-Ghobadi, Somayeh. 2021. "Pricing of Complementary Products in Online Purchasing under Return Policy" J. Theor. Appl. Electron. Commer. Res. 16, no. 5: 1718-1739. https://doi.org/10.3390/jtaer16050097

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