Research On Probabilistic Selling Based On Returns And Consumer Bounded Rationality

With the rapid development of the e-commerce economy,a new sales model has emerged,which is called probabilistic selling.By hiding some of the information of the product,online retailers can attract consumers with a strong preference for product attributes to purchase probabilistic products with vague attributes at a lower price,while consumers with strong preference for products will choose to buy the higher-priced traditional products,which are completely transparent for attributes.Retailers make a profit through the segmentation of the consumer market and price discrimination.Due to the lack of full understanding of the products in the online shopping process,consumers can not experience the actual products,resulting in a gap between consumers' expectations and practical use of product.Therefore,product returns and how to develop a reasonable refund strategy are increasingly becoming prominent problems faced by online retailers.In real life,consumers often have irrational behaviors and decisions.For online retailers,they need to consider the bounded rational behavior of consumers in the process of pricing and related decision-making.Based on the Hotelling model,this paper combines the consumer returns and bounded rational behavior and the probabilistic selling model,and analyzes a singleretailer conducts probabilistic selling strategy on its products with only horizontal differences(such as color differences).Under the assumption that the online retailer implements a full refund strategy for traditional products,this paper first discusses the optimal refund strategy for the probabilistic product and the strategy of products sold when the consumers are rational.That is to say,under the constraints of unit cost of products,residual value of return products for the retailer,residual value of consumer dissatisfied products,degree of product differentiation and consumer satisfaction rate,whether the retailer's optimal choice is to provide money back guarantee for probabilistic products.Then,under the assumption of the consumer's bounded rationality,that is,the expected product satisfaction rate of the consumers in making the purchase decision will have a certain deviation from the actual satisfaction rate after receiving the products,this paper discusses the impact of difference in satisfaction rate on the optimal refund strategy for the probabilistic product and the strategy of products sold.The results of the model show that when the consumers are assumed to be rational,the optimal choice of the online retailer is to provide a money back guarantee for the probabilistic products,while both traditional and probabilistic products are sold.Implementing the full refund strategy for all products lead to higher prices,and the positive effect of the benefit brought to the retailer can make up for the negative effect of the loss caused by the high return on the profit of the retailer.When it is assumed that the consumers are bounded rational and the actual satisfaction rate is better than the expected rate,the outcome is consistent with the decision under the rational assumption.If the expected satisfaction rate is better than the actual rate,the factor of return loss of the products has increasingly significant impact on the retailer.Under the constraints of different parameters,there are three situations in the retailer's decision,one is to provide a money back guarantee for the probabilistic product,and both the traditional products and the probabilistic products are sold,the second is that the retailer does not provide a money back guarantee for the probabilistic products,and both the traditional products and the probabilistic products are sold,and the third is that no refund guarantee is provided for the probabilistic products,and only the probabilistic products are sold.