Accepting returns from competing e-tailer: The role of selling mode

Abstract

Cooperative-return-to-store (CRS) programs, where brick-and-mortar retailers (BMRs) accept returns of products sold on e-tailer platforms, are gaining traction as a strategy to boost store traffic. However, BMRs are often constrained by competitive concerns. This study examines how a competing e-tailer’s selling mode (reseller, marketplace, or dual) influences the viability of CRS for a BMR in a supply chain context. We find that the reseller (marketplace) mode is more favorable to the adoption of CRS by the BMR when the positive externalities of the store traffic are strong (weak). This distinction comes from the BMR’s varying reliance on wholesale price reductions from its supplier. We further show that the dual mode surpasses single modes in enhancing CRS agreements and social value because the e-tailer and third-party seller can share demand shifts. These findings offer actionable insights for BMR managers in partner selection and policymakers to evaluate e-commerce regulations. Our results remain robust across diverse consumer return behaviors, cost structures, decision frameworks, and CRS formats.