Refurbished Products Research Articles

An Exploration of the Value of Timeless Design Styles for the Consumer Acceptance of Refurbished Products

The prior use and age make refurbished products a less desirable option because they are perceived to be of lower quality, to have a reduced performance and a less attractive appearance. This research investigates one strategy on how to enhance the appearance of refurbished products and thereby encourage circular consumption via refurbishment. In 21 in-depth interviews, we explore whether embodying refurbished products in a timeless design can serve as a potential strategy to influence consumer acceptance of refurbished products. Specifically, we examined two design styles that were proposed as timeless: the neo-retro design style, which evokes nostalgia and benefits from associations with the past, and the simplistic design style, that is independent of cultural or time-related cues. Our findings provided qualitative support that the neo-retro and the simplistic design styles can improve consumers’ evaluations of refurbished products. Both design styles were considered to be timeless and elicited favorable associations in consumers. While refurbished products, following a neo-retro design style, evoked positive associations with old products, such as feelings of nostalgia and the good quality of the past, simplistic products benefited from associations with durability and associations with high-quality brands.

Revenue Management in a Refurbishing Duopoly with Cannibalization

Refurbishing has shown good economic potential but firms remain wary due to the cannibalization effect on new product sales. In this paper, we shed light onto how such firms would need to make their strategic choices under duopolistic competition between firms with different brand strength, and under (often publicly set) collection constraints. We do so by first empirically characterizing consumer behavior in such complex settings, and then utilizing these insights to analytically model and study optimal pricing policies. We show that the inverted-U-shaped cannibalization behavior, that had been demonstrated in a monopolistic setting, is largely absent in a duopolistic setting. Our experimental results further show that cross-cannibalization is an effect to be reckoned with, especially for low-brand firms facing competition from high-brand firms offering refurbished products. Our analytical results show that manufacturers with a strong brand should increase the prices of their refurbished products if the cross-cannibalization coefficients of the low-brand consumers are higher. Low-brand firms instead should focus on beating the high-brand competitors in collection and refurbishing efforts. Finally, we show that the collection constraints have an effect on the pricing strategy of both the high-brand and the low-brand manufacturers. As a consequences, such constraints that are typically set exogenously by public authorities will impact the actual pricing and market equilibria.

On the Competition between Two Modes of Product Recovery: Remanufacturing and Refurbishing

The markets for recovered products in China typically consist of both remanufactured and refurbished products. The government requires that the remanufactured product match the quality level of the new product, while no such requirements exist for the refurbished product. Furthermore, remanufacturing is a relatively new phenomenon in China, whereas the refurbishing industry is old, widespread, and largely unregulated. Compared to the new product, the two types of recovered products enjoy a cost advantage, but they suffer from a lower willingness‐to‐pay in the consumer market. These observations lead to a game‐theoretic model consisting of three players: an original equipment manufacturer (OEM) providing the new product, a remanufacturing firm, and a refurbishing firm. The goal is to understand what equilibrium market structure may arise and how the equilibrium outcome depends on some of the key model parameters. It is found that (1) the entry barrier for the remanufacturer is always higher than that for the refurbisher; (2) remanufacturing almost always reduces the environmental and social (E/S) impact of the secondary market (for spare parts), such as the consumption of raw materials and energy during parts production, emissions and safety concerns during product use, and the E/S impact incurred during product disposal; and (3) the OEM has a natural tendency to discourage any form of product recovery by a third party, refurbishing or remanufacturing. These findings have potential policy implications for the government’s effort in cultivating the remanufacturing industry.

Demand signal transmission in a certified refurbishing supply chain: rules and incentive analysis

Retailers, who sell certified refurbished products, usually have accumulated big data on demand properties, and hence, hold demand signal advantages over the other supply chain parties. In practice, we observe that this signal might be voluntarily shared to a rival who sells regular products. We are therefore interested in the incentives of demand signal transmission of the retailer selling certified refurbished products, and the value of an accurate signal for the other supply chain parties, especially in a one-to-two supply chain comprising a manufacturer (producing both regular and certified refurbished products) and two retailers (selling regular and certified refurbished products, respectively). We formulate the two retailers’ competition and demand signal properties, and find that it is of the best interest for the manufacturer to produce two products, regardless of the possible downstream competition. We derive interesting demand signal transmission rules that the retailer selling certified refurbished products would voluntarily transmit the signal to the retailer (the rival) selling regular products, while it will not transmit the signal to the upstream manufacturer (the business partner). Even if the retailer selling regular products obtains the signal, it will not transmit the signal to the manufacturer either. We discuss the resulting insights regarding the production cost reduction, the government subsidy, and the product quality improvement. We find that the signal transmission rule is robust, and the retailers’ profits may be reduced by the quality improvement of the certified refurbished product.

The impact of C2C Communication and Shared Information on Buying Decision: ―A Buyer's Perspective"

C2C e-commerce has been gradually more utilized by consumers to buy and sell goods prominently nowadays. With this increase in usage a need for detailed studies regarding C2C e-commerce has been created. The information shared among the buyers of C2C ecommerce plays a vital role in consumer's purchase behavior along with other factors. The present study aims to find out the impact of shared information and communication among C2C online consumers on making purchase decisions. Based on 290 effective respondents, the TAM model is used to find out the respondent’s online purchase intention is influenced by shared communication along with perceived risk, and trust of the model. SPSS 25 is used to find the regression analysis and correlation analysis to study the impact and influence of the above mentioned variables. The findings show that there is a significant relationship between the electronic word of mouth and purchase intention of consumers which is created through perceived ease of use, and perceived trust. The C2C online models are a successful platform for the users who interested to buy second hand or refurbished products through ecommerce. The study helps to find out whether there is any trustful or risk free purchase is possible if the consumers communicate about the product or services that offered.

Incentive alignment of brand-owner and remanufacturer towards quality certification to refurbished products

Abstract We aim to study the incentive alignment issues of a brand-owner and a remanufacturer towards quality certification for refurbished products. We develop a game theoretic model where a remanufacturer (he) with a quality image disadvantage sells refurbished products and a brand-owner (she) wholesales regular products to her retailer. The customers have an uncertain quality image towards the refurbished products. It is optional for the remanufacturer to eliminate his quality image disadvantage by receiving a certification from the brand-owner. We find that the brand-owner and the remanufacturer reach incentive alignment when their competition is intense and the remanufacturer's quality image disadvantage is significant. Regarding the brand-owner, she has one more revenue source, and her profit margin is increased by offering quality certification for the remanufacturer. We further study the influence of quality uncertainty variance of the refurbished product on two firms' performances, and we find that the opportunity of their incentive alignment becomes constrained when the refurbished product demand is highly varying.

A decision model for competitive remanufacturing systems considering technology licensing and product quality strategies

Abstract Fast maturation and obsolescence of electronics have caused the accumulation of untreated Waste Electrical and Electronic Equipment (WEEE), which results in environmental issues around the globe. Accordingly, remanufacturing systems have been developed to recover or perform proper disposal of WEEE. Over the decades, remanufacturing has continuously grown and has attracted customers' interest in reprocessed products, hence, inducing the competition of the said market. For a remanufacturer to gain a competitive advantage in the market, it is necessary to optimize both operational and managerial aspects comprehensively. Therefore, this study aims to model the competition between independent remanufacturer player's (IR) supply chain systems that integrate these two aspects. First, IR's supply chain system operational decisions involving multi-period-horizon and multi-process production planning, product flow, and product purchasing and takeback will be formulated into a mixed integer linear model. Lastly, IRs' supply chain system compete with each other in a perfect-market-competition game model that considers technology licensing and product quality strategies. Results from numerical examples show that royalty licensing is the better technology licensing strategy compared to fixed-fee licensing strategy in terms of costs. In addition, selling remanufactured products, which are of higher quality, yield less profit than selling refurbished products. However, remanufactured products are less susceptible to product value depreciation and price changes over time, therefore, generating more stable income in different conditions. With the fast-paced technological development, the proposed model could address complex remanufacturing supply chain problems, offering decision-makers a tool in optimizing the remanufacturing system.

Consumers preferences in purchasing recycled/refurbished products: An empirical investigation

In this paper, we empirically examine consumers' behaviour in purchasing products made of recycled material. The impact of three factors of discount, warranty, and money-back guarantee (return acceptance) on respondents' willingness to buy recycled/refurbished products are analysed by conducting a survey using a questionnaire on 150 respondents. Our survey examines how people with different levels of consumer environmental awareness (CEA) and perceived consumer effectiveness (PCE) behave while they buy various types of recycled/refurbished goods. To this aim, we categorise products into four sorts: 1) technology; 2) household; 3) personal; 4) luxury. Our findings reveal that recycled/refurbished technology products are more popular while there is a little interest in buying refurbished personal products. In addition, the results demonstrate that, although offering discount and warranty have a positive impact on the consumers' willingness to purchase recycled/refurbished products, more than half of the respondents prefer money-back guarantee when buying a recycled/refurbished product.

Supply chain transparency and willingness-to-pay for refurbished products

PurposeResearchers in supply chain transparency have called to expand the boundaries by disclosing various types of information to multiple stakeholders. The purpose of this paper is to explore the effect of transparency about supply chain sustainability on consumers as critical stakeholders and investigate the effectiveness of message characteristics.Design/methodology/approachThis study utilizes two scenario-based experiments grounded in a refurbished goods context: Study 1, which employs a 2×2 between-subject experiment investigates the effects of product type and sustainable information provision on consumers evaluations, and Study 2, which employs a 2×1 between-subject experiment examines the effects of sustainable information direction on consumer evaluations. A total of 348 participants were recruited from the Amazon M-Turk platform across the two experiments. Data are analyzed with regression analysis using the PROCESS macro in SPSS and the Johnson–Neyman technique.FindingsContrary to prior research that assumes that refurbished products are associated with lower quality, quality perceptions are moderated by individuals’ environmental involvement (EI) and the information presented by the firm. More importantly, consumer evaluations are influenced by specific characteristics of sustainable supply chain messages: high EI individuals have higher willingness-to-pay a premium (WTPP) when the message is consistent with original beliefs (pro-attitudinal). In contrast to prior theory, there was no difference in the WTPP of consumers with high EI and low EI for counter-attitudinal messages.Practical implicationsThe study shows that what to say, how to say it and to whom, are critical for firms who seek to nudge consumers to support their sustainable practices.Originality/valueThe value of communicating information on sustainability has been well established. However, little is known about such association when the information provided trades off environmental benefits and product quality. This research addresses the gap in a refurbished product context. The research studies the effect of sustainable supply chain transparency and message characteristics on stakeholders’ evaluations.

Using Word Embedding and Community Discovery to Understand the Market for Remanufactured and Refurbished Products

Using Word Embedding and Community Discovery to Understand the Market for Remanufactured and Refurbished Products

Pricing decisions for a supply chain with refurbished products

This paper considers a supply chain consisting of a supplier and a retailer where a fixed portion of new products sold will be returned to the retailer and then be repaired and resold as refurbished products at a lower price. Using the utility model, we formulate how consumers will make their choices when facing both new and refurbished products. Then, using the divide-and-conquer method, we derive the supplier and retailer's equilibrium decisions, including the supplier's wholesale price and the retailer's prices for both the new and refurbished products. The main findings include the following. First, refurbished products will be sold in the market only when the refurbishing cost is small. In this situation, as the refurbishing cost increases, most of the negative impact on the retailer will be transferred to the supplier. Second, in the same condition, as the refurbishing cost increases, the wholesale price and retail price of the new product will change in opposite directions. This result contrasts with the traditional pass-through effect. Third, when the repair cost is moderate, the retailer will eventually not sell refurbished products, but its profit can be significantly improved and the double marginalisation effect can be mitigated.

Refurbishment or quality recovery: joint quality and pricing decisions for new product development

Refurbishment and quality recovery, as two important strategies of reverse logistics, have been widely used for consumer durables, especially consumer electronics. This trend is driven by manufacturers’ profit-seeking behaviours and the increasing environmental concerns of society. This study investigates and compares the optimal emergence of these two strategies when product quality is endogenous. Model analyses provide several notable insights. First, we find that the refurbishment strategy dominates the quality recovery strategy when the fraction of the recoverable quality-inducing components in the defective product is low enough. Moreover, when the refurbishment strategy emerges as the optimum, the quality and price of the new product as well as the total realised sales of both new and refurbished products are consistently higher than those with the quality recovery strategy. In addition, when either the refurbishment or quality recovery strategy emerges as the optimum, the overall consumer surplus is also enhanced. Finally, in the model generalisation, we show that a synthetic strategy with which some of the returned defective products are refurbished and others are remanufactured through quality recovery can certainly increase the manufacturers’ profit compared to either one of them when the fraction of the recoverable quality-inducing components in the defective product is moderate.

‘If It Ain’t Broke, Don’t Explain It’: The Influence of Visual and Verbal Information about Prior Use on Consumers’ Evaluations of Refurbished Electronics

Refurbishment presents opportunities for designers to improve the sustainability of new and old products via an experiment and post hoc interviews, this research investigates and explores how information about prior use – offered in a visual (signs of wear and tear) or verbal (textual description) form – influences consumers’ evaluations of refurbished products. The findings show that visual information about prior use has a negative effect on consumers’ evaluations of refurbished electronics. Furthermore, presenting consumers with verbal information on prior use can negatively affect consumers’ evaluations of a refurbished product if no signs of wear and tear are present because it confuses consumers. If signs of wear and tear are present, verbal information about prior use will not influence consumers’ evaluations.

PRICING DECISION FOR UNSOLD NEW AND REMANUFACTURED PRODUCTS WITH OPTIMAL PRODUCTION PLANNING

New generation of high-technology products are lunched with an intensive innovation rate before the early generation is sold out. While in the market of remanufactured products, upgrading is necessary to keep pace with the technology development. Additionally, the supply of the remanufactured products is restricted by the returned cores. Hence, a problem surfaces because of the unattractive new products belonging to the early generation stock, while the attractive refurbished products belonging to the updated technology are in short supply. Returning number of unsold products for upgrading provides a possible solution. This paper provides a method to price the new and the remanufactured products. How many unsold new products would be returned to remanufacture and how many used products would be acquired are in the scope of this paper. A profit maximization model associated with discrete choice demand function is provided.

An optimisation approach for finding an optimal pricing in a hybrid manufacturing/remanufacturing system

Hybrid manufacturing/remanufacturing in closed loop manufacturing system (CLMS) has gained considerable attention in industry over past few years due to environmental concern. Remanufacturing of used products basically includes activities like acquisition of used product, reverse logistics, cleaning, inspection, reassembly, disposal of unused material, and remarketing. Determination of selling prices of remanufactured product is also complex and an important decision making area as the profitability of remanufacturing business is significantly dependent on it. Under the above circumstances in this research paper, a profit-maximisation model is developed to optimise selling price of new products and used products using genetic algorithm. OEM (original equipment manufacturer) sells remanufactured products in place of brand new products as there is no quality difference between them and also sells refurbished products and spare parts into secondary market. In this paper a numerical example and sensitivity analysis has been performed.

An optimisation approach for finding an optimal pricing in a hybrid manufacturing/remanufacturing system

Hybrid manufacturing/remanufacturing in closed loop manufacturing system (CLMS) has gained considerable attention in industry over past few years due to environmental concern. Remanufacturing of used products basically includes activities like acquisition of used product, reverse logistics, cleaning, inspection, reassembly, disposal of unused material, and remarketing. Determination of selling prices of remanufactured product is also complex and an important decision making area as the profitability of remanufacturing business is significantly dependent on it. Under the above circumstances in this research paper, a profit-maximisation model is developed to optimise selling price of new products and used products using genetic algorithm. OEM (original equipment manufacturer) sells remanufactured products in place of brand new products as there is no quality difference between them and also sells refurbished products and spare parts into secondary market. In this paper a numerical example and sensitivity analysis has been performed.

Refurbishing authorization strategy in the secondary market for electrical and electronic products

In the electrical and electronic products secondary market, third party resellers (TPR) engaging in product refurbishing are growing rapidly, which provides direct competition to the original equipment manufacturers' (OEMs) new product sales. Irrespective of prices, consumers have shown a higher preference for refurbished products from the OEMs and OEM-authorized TPRs than non-authorized TPRs. As a result, some OEMs choose to provide refurbishing authorization to TPRs who are required to meet specific standards and pay an authorization fee. Besides the strategy of refurbishing authorization, an OEM could choose strategies such as participating in direct refurbishing work or not at all. The main goal of this paper is to examine under what conditions the refurbishing authorization strategy is optimal for the OEM. The essential tradeoff is whether the indirect benefit from authorizing a TPR, which includes an enlarging market share, can outweigh the direct cannibalization effect of authorized refurbished products on new products sales. To that end, we develop Bertrand competition models between an OEM and a TPR using several strategies. Results show that when the consumers' preference for refurbished products relative to new products is not large enough, the OEM should choose the authorization strategy. The OEM and authorized TPR achieve a win-win outcome under some conditions. We also find that a higher authorization fee is not always a better option for the OEM.

Reverse logistics network design under greenness, reliability and refurbished product demand considerations

The aim of this paper is to present a new closed-loop supply chain (CLSC) network design model for multi-component and multi-product systems. This integrated model is more representative of industrial operations and takes into account the following important design factors: multi-component products, design for disassembly, existence of a secondary market for refurbished products, bill of material for product decomposition into parts, reliability and greenness levels of parts/products. A mixed-integer programming model is developed for a forward/reverse logistic network that includes suppliers, customer zones, inspection, repair and disassembly centres (IRDC), and a recycling centre. A wide range of numerical experiments are conducted and sensitivity analyses are carried out on various parameters yielding valuable managerial insights. The model is used to expose the effects of parts reliability and product greenness on the reverse flow and the economical operating market range for refurbished products in the reverse flow.

Reverse logistics network design under greenness, reliability and refurbished product demand considerations

The aim of this paper is to present a new closed-loop supply chain (CLSC) network design model for multi-component and multi-product systems. This integrated model is more representative of industrial operations and takes into account the following important design factors: multi-component products, design for disassembly, existence of a secondary market for refurbished products, bill of material for product decomposition into parts, reliability and greenness levels of parts/products. A mixed-integer programming model is developed for a forward/reverse logistic network that includes suppliers, customer zones, inspection, repair and disassembly centres (IRDC), and a recycling centre. A wide range of numerical experiments are conducted and sensitivity analyses are carried out on various parameters yielding valuable managerial insights. The model is used to expose the effects of parts reliability and product greenness on the reverse flow and the economical operating market range for refurbished products in the reverse flow.

Extracting Maximum Value from Consumer Returns: Allocating Between Remarketing and Refurbishing for Warranty Claims

The high cost of lenient return policies force consumer electronics original equipment manufacturers (OEMs) to look for ways to recover value from lightly used consumer returns, which constitute a substantial fraction of sales and cannot be resold as new products. Refurbishing to remarket or to fulfill warranty claims are the two common disposition options considered to unlock the value in consumer returns, which present the OEM with a challenging problem: How should an OEM dynamically allocate consumer returns between fulfilling warranty claims and remarketing refurbished products over the product’s life cycle? We analyze this dynamic allocation problem and find that when warranty claims and consumer returns are jointly taken into account, the remarketing option is generally dominated by the option of refurbishing and earmarking consumer returns to fulfill warranty claims. Over the product’s life cycle, the OEM should strategically emphasize earmarking of consumer returns at the early stages of the life cycle to build up earmarked inventory for the future warranty demand, whereas it should consider remarketing at the later stages of the life cycle after enough earmarked inventory is accumulated or most of the warranty demand uncertainty is resolved. These findings show that, for product categories with significant warranty coverage and refund costs, remarketing may not be the most profitable disposition option even if the product has strong remarketing potential and the OEM has the pricing leverage to tap into this market. We also show that the optimal dynamic disposition policy is a price-dependent base-stock policy where the earmarked quantity is capacitated by the new and refurbished product sales quantities. We compare with the myopic policy and show that it is a good heuristic for the optimal dynamic disposition policy.