Dynamic Modeling of Controllable Returns in E-commerce: The Impact of Seller Restrictions on Platforms

Effective operations management is pivotal in driving revenue and profitability for organizations in today’s business world, particularly in e-commerce and online markets. Among the critical areas of operations management, product returns have garnered increasing attention. Although product returns could benefit businesses by increasing customer loyalty, trust, and satisfaction, reducing advertising costs, and attracting new customers for sellers, they can also harm sellers by increasing transportation costs, reducing profits, and affecting product quality. As a result, e-commerce platforms need to determine an optimal level of strictness in product returns policy. This study examines the dynamic model of seller-controllable returns in e-commerce platforms and investigates how imposing restrictions on sellers with high return rates influences overall return volume. The findings demonstrate that as seller restrictions tighten, the return rate decreases, suggesting that e-commerce platforms should consider implementing policies restricting sellers with high return rates to reduce their product returns.