How Can We Promote Smartphone Leasing via a Buyback Program?

Abstract

Leasing is an important sustainable PSS model of recycling smartphones, and they have emerged as a crucial component of retailers’ business evolution in recent times. Using hybrid selling–leasing transformations, retailers not only provide selling services but also leasing services, which not only increases revenue sources but also triggers internal competition. Due to this, retailers are reluctant to promote smartphone leasing. How can we enhance retailers’ motivation to promote smartphone leasing? This paper aims to answer this question by exploring the potential of a manufacturer’s buyback program and analyzing three price decision models: pure selling (S), hybrid selling–leasing without a buyback program (SL), and hybrid selling–leasing with a buyback program (HSL). The results show that (1) when consumers’ acceptance of leasing is moderate, retailers can benefit from hybrid selling–leasing transformation. (2) If the manufacturer chooses to buy back used leasing smartphones from the retailer, it is advisable to set a high buyback price that is at least equal to their residual value. (3) The buyback program can increase consumers’ leasing demand and manufacturer’s profits, as well as decrease the environmental impact of the supply chain system. More importantly, it has the potential to drive retailers to conduct hybrid selling–leasing transformation and can establish a positive correlation between retailers’ profits and consumers’ acceptance of leasing. This means that buyback programs can promote smartphone leasing and can be beneficial for smartphone recycling and urban sustainable development.