Returnable-after-deep-trial policies in e-commerce supply chains with opportunistic consumers

• Study online returnable after deep trial (RADT) policy under consumers’ opportunistic behavior. • Consider an e-commerce supply chain under agency selling or reselling mode. • Seller might strategically encourage opportunistic behavior to generate profits. • RADT may lower wholesale price under reselling mode, but always raises retail price. • Whether to use RADT depends on return rate and consumers’ benefit from opportunistic behaviour. In response to consumer desire for a deep experience of product performance, some online sellers have strengthened their traditional money back guarantee by implementing the “returnable after a deep trial” (RADT) policy. But such a policy has also encouraged opportunistic behavior. Considering such opportunistic behavior for consumers, we build an e-commerce supply chain model to investigate the price decisions and the return strategy (implementing RADT or not) of online sellers under two selling modes: agency selling and reselling. We show that the RADT is often expensive for consumers. Besides, counterintuitively, when the online seller allows for an increased degree of deep trial, the seller is highly likely to decrease the retail price and the refund amount, simultaneously. Moreover, opportunistic consumers also have strategic value: although consumers’ opportunistic behavior under the RADT seemingly harms the online seller, in fact, the seller may generate profits by strategically encouraging opportunistic behavior. Furthermore, under agency selling, when consumers’ benefit from opportunistic behavior is not extremely small, and most ordinary consumers directly return the product, the RADT is optimal; while under reselling, the RADT is optimal if most ordinary consumers directly return the product. Surprisingly, more opportunistic consumers increase the online seller’s incentive to adopt the RADT policy.