Abstract: The Internet has made online shopping a global daily phenomenon. In 2018, online retail sales surpassed MYM2.5 trillion all over the world, while that of Chinese websites reached approximately RMB 9 trillion. Customers, however, cannot touch or feel a product before they purchase online. Indeed, product returns in Internet retailing have been shown to be, on average, as high as 22% of sales. This leads to much higher rates of customer returns in the online channel, which in turn leads to significant costs to retailers. In this context, the "offline evaluation, online purchase" mode has been increasingly viewed as an effective and novel way to provide information of the product to the customers and this mode can mitigate information gap exists in the supply chain. However, the existence of product return behavior and information asymmetry leads to incentive misalignment in the supply chain. To solve this problem, the optimal pricing policies and offline to online channel strategies are analyzed within a supply chain that consists of a manufacturer and an online retailer. Optimal pricing policies and the offline to online channel strategies and proposed, as well as the optimal contracts with consumer returns under full information and asymmetric information, respectively.
The main work in this paper includes four parts. At first, optimal contracts are proposed and the optimal pricing strategies and contract design under full information and asymmetric information, respectively. Second, on this basis, the effects of the O2O channel strategies are analyzed on the equilibriums, and consequently the optimal pricing, demand and contract design of supply chain members are compared under different types of return cost. Third, the optimal decisions of both the manufacturer and online retailer, and the changing of consumer surplus are compared under full and asymmetric information. And the effect of different types of return cost and asymmetric information on willingness to share information and negotiation behaviors is presented. Finally, to address the value of O2O channel, the optimal decisions of both the manufacturer and online retailer, and the changing of profit of supply chain members and consumer surplus under before and after Introduces the O2O channel are compared.
The results show that, the contracting scheme, composed of a wholesale price and a fixed payment, can coordinate the supply chain perfectly under symmetric information. The O2O channel strategies may not increase the retailer's expected profit, but it is favorable for the profit of manufacturer and the supply chain. The introduction of showroom can increase the consumers' surplus, but may not increase the consumers' surplus when evaluate products at showroom to identify their "best-fit" product but buy it at the online retailer. It's found that the online retailer may have an incentive to reveal the private information voluntarily and share the supply chain's profit with manufacture under certain condition.
In summary, the value of O2O channel under asymmetric information is investigated. Moreover, the contracting mechanisms are used to coordinating the supply chain under asymmetric information, which offers a practical and a theoretical guidance to improve the value of online retail supply chain.

Key words: O2O channel, offline showroom, asymmetric information, pricing, contract design