Abstract:In this study, we investigate how the manufacture and the online platform cope with customer returns in the presence of consumer fit uncertainty by managing price and information accuracy of the product. We first examine the impact of We consider a supply chain in which a manufacturer sells a product through an online platform to investigate the impacts of the manufacturer’s pricing strategy and the platform’s product information provision strategy on the customer’s purchasing and product returns behaviors due to fit uncertainty. We also examine how the platform should choose product information provision strategy and information accuracy, and how the manufacturer should choose its pricing strategy and selling price. We find that the information provision can reduce product returns rate if both price and information accuracy are sufficiently high, at the expense of a possible decrease in demand. The manufacturer and the platform have three strategy profiles, a low price set by the manufacturer to mitigate returns that induces the platform to choose a low information accuracy to increase demand, a high price set by the manufacturer that induces the platform to disclose full product information to mitigate the customer’s fit uncertainty, and a moderate price set by the manufacturer to control returns rate that induces the platform to decrease information accuracy and increase demand. We identify the conditions under which each of the three strategy profiles can dominate. We also discuss the impacts of the customer’s unit misfit cost and the salvage value of a returned product on the manufacturer’s equilibrium price and the platform’s information accuracy.