An analysis of cross-channel return processing with return-freight insurance for live streaming platforms

Abstract

Live streaming has witnessed a steady growth with advances in E-commerce, many offline manufacturers have adopted live streaming as a tool to improve online sales performance. However, one of the challenges faced by the manufacturer is return problem, such as cross-channel return, return cost sharing. To address this, offline manufacturers, nowadays, are adopting return-freight insurance. This study uses evolutionary game theory to investigate the dynamic evolution process for the decision of return-freight insurance and cross-channel return between the offline manufacturer and consumers in live streaming. In the modeling process, the payoff matrices and replicator dynamics equations between the manufacturer and consumers are constructed. The following two issues are addressed: who bears the cost of return-freight insurance and whether there is a stable strategy choice for the return mode of consumers. Further, the selection of an evolutionary stable strategy (ESS) for the entire system is explored. Numerical simulation is conducted to validate the effects of the parameters on the decisions of both players. The results show that the final ESS for the entire system can be changed by adjusting relevant parameters and the initial strategy combinations of both players. Thus, this study contributes by generalizing the application of return-freight insurance in trade processing and highlighting the importance of return-freight insurance in return behavior.