Offering indoor trade‐in? Optimal “one‐stop” trade‐in service strategy

Abstract In recent years, some firms have introduced “one‐stop” trade‐in services, where consumers receive the new product after participating in the activity and return the old one to the service provider at home. To examine whethh firms’ decisions on offering “one‐stop” trade‐in services, we develop theoretical models involving a brand firm and a retailer. The results show that the brand firm should not provide the “one‐stop” trade‐in service when the new product scheduling cost in the “one‐stop” trade‐in service is relatively high. Otherwise, the brand firm should (not) provide the “one‐stop” trade‐in service if the fixed cost of implementing the “one‐stop” trade‐in service is relatively low (high). Furthermore, the brand firm is more willing to provide a “one‐stop” service under a decentralized system than a centralized one. In the extensions, we consider the two‐part tariff contract, the impact of online reviews and the differences in consumer satisfaction with the final trade‐in rebate, and find that the main conclusions remain solid.