Abstract:

Omni-channel retailing is a new model that combines online store and offline physical store. In the context of omni-channel retailing， retailers provide consumers with more options for return channels， including same-channel return mode （offline/online purchase， offline/online return） and cross-channel return mode （online store purchase， offline physical store return）. For retailers， although the cross-channel return service can reduce the logistics cost of returns to an extent and increase the consumer traffic of offline physical store， the choice of return channels and the re-sale of returned products brings challenges to the inventory management. If the inventory is higher than consumer demand， it will bring the pressure of inventory holding cost to retailers. If inventory falls short of consumer demand， retailers will incur out-of-stock cost. Based on the analysis， the inventory decision under omni-channel retail considering returns is studied in two cases： same-channel returns and cross-channel returns. On the basis of considering consumer returns and the resale of returned products， the newsvendor model is used to construct inventory decision models in the case of same-channel returns and cross-channel returns aiming at maximizing retailers' profit， and the models are analyzed. The numerical analysis shows that， the proportion of online consumers using ROPS （reserve-online and pick-up-and-pay-in-store） to purchase when out of stock， the proportion of resale of returned products， the proportion of online returns， and the proportion of cross-channel returns have a significant impact on the inventory of the offline physical store and online store and profit. Specifically， under the cross-channel returns mode， the inventory decision quantity of offline physical store should be directly proportional to the proportion of online consumers using ROPS to purchase when out of stock or the proportion of online returns， and inversely proportional to the proportion of resale of returned products or the proportion of cross-channel returns； the inventory decision quantity of the online store should be directly proportional to the proportion of online consumers using ROPS mode to purchase when out of stock， the proportion of online returns or the proportion of resale of returned products， and inversely proportional to the proportion of cross-channel returns. The difference between the same-channel returns model and the cross-channel returns model is that the proportion of online returns or the proportion of resale of returned products has no significant influence on the inventory decision in the offline store. In particular， when the cross-selling profit is large， the profit of the retailers will increase with the proportion of cross-channel returns， but the profit of the retailers may decrease with the proportion of online returns. In terms of practical application， although there is still a certain gap between the model construction and the reality， the relevant conclusions can also provide a certain theoretical foundation and decision-making reference for the retailers' omni-channel retailing operation management.

Key words: omni-channel retailing, consumer returns, newsvendor model, inventory management