Abstract: It is not uncommon for consumers to suffer the problem of product fit uncertainty in online retailing. To mitigate this problem, this paperstudies how the online retailer should use theonline try before you buy strategy.Different from other marketing strategies, the online try before you buy strategy provides an opportunity for consumers to try the product at home before making the purchase decisions. Through the construction and analysis of a mathematical model,this paperderives the consumers' optimal purchase decisions and the online retailer's optimal pricingdecision when the online try before you buy strategy is adopted. In addition, we explore the optimality condition for the online retailer to carry out this strategy and its value to mitigate the problem of product fit uncertainty in online retailing.The results show thatwhen the matching probability between the product value and consumer preference and consumers' hassle cost to use the try before you buy service arelow,the online retailer should adopt this strategy.With the decrease of consumers' hassle cost or the value loss caused by the mismatching, the adoption of the online try before you buy strategy can effectivelyimprovethe online retailer's profit more.
Keyword:try before you buy; product fit uncertainty; heterogeneous consumer; hasslecost
[1]. Bell, D. R., Gallino, S., & Moreno, A. (2018). Offline showrooms in omnichannel retail: Demand and operational benefits. Management Science, 64(4), 1629-1651.
[2]. Brightpearl. (2018).TRY BEFORE YOU BUY: A Returns Tsunami for Retail.https://info.brightpearl.com/returns-tsunami-for-retail.
[3]. Chu, W., Gerstner, E., & Hess, J. D. (1998). Managing dissatisfaction: How to decrease customer opportunism by partial refunds. Journal of Service Research, 1(2), 140-155.
[4]. Davis, S., Gerstner, E., &Hagerty, M. (1995). Money back guarantees in retailing: Matching products to consumer tastes. Journal of Retailing, 71(1), 7-22.
[5]. Dacko, S. G. (2017). Enabling smart retail settings via mobile augmented reality shopping apps. Technological Forecasting and Social Change, 124, 243-256..