Optimal Livestream Selling Strategy with Buy-Online-and-return-in-store

To reduce the adverse impacts of consumer returns, retailers have taken a series of measures to reduce the return rate and improve the consumer purchasing experience. These measures include opening a self-run livestream channel and allowing online consumers to buy-online-and-return-in-store (BORS). In practice, there are remarkable heterogeneities between the two strategies: Some retailers provide one or both strategies, while others do not. Furthermore, it is unclear how the introduction of a self-run livestream channel will impact a retailer's adoption of BORS. This paper develops a theoretical model to investigate a retailer's optimal decisions on adopting a self-run livestream selling or BORS service. By comparing the retailer's equilibrium profits under four strategies, we identify the conditions for adopting each strategy. The retailer's optimal strategies mainly depend on the in-store return handling cost and the face value of the coupon in the self-run livestream channel. Furthermore, we find a counterintuitive result that if consumers are offered a relatively high coupon, the introduction of a self-run livestream channel reduces the threshold for the retailer to provide BORS service. We extend the model by considering an endogenous coupon face value and find the main results are still valid.