Title: To overstate or not: how to describe new products online for e-tailers considering full return policy

Authors: Wei Xiong; Jin Qin

Addresses: Department of Management Science, School of Management, University of Science and Technology of China, Hefei, Anhui, 230026, China ' Department of Management Science, School of Management, University of Science and Technology of China, Hefei, Anhui, 230026, China

Abstract: In order to compete with online and offline rivals, e-tailers need to pay specific attention to online product description to attract customers and get their orders. Most e-tailers also provide full return service to lower customers' risk perception of online purchase and minimise their possible loss. How to describe product online in consideration of full return policy is a difficult problem for e-tailers since overstatement may increase sales but incur more returns, otherwise the sales may decrease as well as the return cost. In this paper, we study e-tailer's optimal description strategy for new products which have low salvage values. Our results indicate that monopoly e-tailer will not overstate in new product description considering the full return policy. In duopoly case, low quality e-tailer will not overstate while high quality e-tailer will do under certain conditions, and high quality e-tailer's overstatement will benefit both e-tailers under full return policy.

Keywords: full returns policy; overstatement; e-tailing; B2C; online purchase; online product descriptions; consumer perceptions; risk perception; retailer deception; online retailing.

DOI: 10.1504/IJMDM.2014.060863

International Journal of Management and Decision Making, 2014 Vol.13 No.2, pp.174 - 191

Available online: 01 May 2014 *

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