Research On The Value Of Freight Insurance Under Different Return Freight Insurance Undertakers

With the rapid development of mobile communication technology and the continuous improvement of people’s living standards,e-commerce has flourished unexpectedly,and online shopping has become a daily necessity for people.The increasing sales of online goods have also brought new problems-the constant increase in the volume of product returns.Unlike offline shopping,consumers who choose to shop online are unable to personally experience and observe the products before purchasing,resulting in a large number of returns for e-commerce platforms.To address this issue,many e-commerce platforms have implemented refund policies to reduce consumers’ concerns.However,a full refund from the e-commerce platform cannot solve the problem of the high cost of return shipping and who should bear the cost.Huatai Insurance Company was the first to introduce return shipping insurance to solve this problem,and since then,return shipping insurance has played an increasingly significant role in online retail,with more diverse options.Currently,there are two main types of shipping insurance available in the market.One is sellerprovided shipping insurance,where the cost of the insurance is borne by the seller,who provides the insurance service to consumers free of charge when they purchase goods.The other is buyer-provided shipping insurance,where consumers can choose to purchase the service before shopping.Providing shipping insurance can reduce consumers’ concerns before purchasing and increase sales,but the cost of providing the service also increases the seller’s cost.Therefore,whether to introduce shipping insurance and whether the cost of shipping insurance should be borne by the ecommerce platform has become a key concern for e-commerce platforms.This article assumes a supply chain consisting of manufacturers,e-commerce platforms,and consumers.Using theoretical methods such as supply chain and economic game theory,three Stackelberg game models are established under different scenarios,taking into account factors such as return value and compensation.Firstly,the optimal decision-making of manufacturers and e-commerce platforms without freight insurance is taken as the benchmark scenario,and the impact of factors such as return costs,consumer sensitivity to prices and return compensation on sales prices,market demand,and supply chain member profits are explored.Secondly,the seller version of freight insurance is considered,and the different impacts on the profits of manufacturers and e-commerce platforms when jointly or separately bearing the cost of freight insurance are compared.The advantages and disadvantages of introducing the seller version of freight insurance are compared with the scenario without freight insurance.Finally,the situation where consumers purchase freight insurance is analyzed,and compared with the scenarios without freight insurance and the seller version of freight insurance,the following conclusions are drawn: the unit cost of merchants purchasing freight insurance is a key factor in whether to introduce the seller version of freight insurance.When the cost of freight insurance is low and the return volume is low,manufacturers and e-commerce platforms should adopt the seller version of freight insurance,otherwise,the strategy of consumer bearing freight insurance should be adopted.The wholesale price,sales price,and market demand under the buyer version of freight insurance scenario are always higher than that without freight insurance.When a large proportion of consumers are willing to purchase freight insurance,manufacturers and e-commerce platforms should adopt the buyer version of freight insurance strategy.When consumers are more sensitive to return compensation,the strategy of not introducing freight insurance should be adopted.The joint bearing of freight insurance costs by manufacturers and retailers only affects the wholesale price of manufacturers and does not affect the sales price and profits of supply chain members.This article establishes two different game models for freight insurance under different liable parties,and through numerical simulation analysis,it is found how the profits of manufacturers and e-commerce platforms will change under different conditions,whether manufacturers and e-commerce platforms should provide freight insurance,and who should bear the cost of freight insurance.This has certain guiding and practical significance for various supply chain members in online retail transactions in real life.