Dual-Channel Decisions under Blockchain and Returns

Abstract

Blockchain is currently used in a wide range of industries to improve the efficiency of the circulation of goods and effectively reduce counterfeiting in supply chains. In order to improve consumer trust in their purchases and reduce returns, the paper develops four models of consumers return based on blockchain technology from a consumer utility perspective. We conducted a Stackelberg game to analyze the impact of return modes and blockchain technology on optimal decisions and consumers, where consumers can return goods through the original channel, all through the online channel, and all through the offline channel. The major results of our study show that when blockchain technology is not used, the costs of return hassles in one channel can have an impact on other channels, and the adoption of online returns is advantageous to both consumers and the retailer. When blockchain technology is used, the manufacturer offers the retailer a lower wholesale price as a subsidy for the unit validation fee, which is always advantageous to the retailer. In most situations, implementing blockchain technology can boost consumer surplus. Only if the fixed cost of blockchain technology is low would the manufacturer adopt it.