Abstract: On February 2, 2021, the State Council, the Director General of Customs and the State Administration of Taxation adopted a new duty-free policy for outlying islands in Hainan Free Trade Port, allowing duty-free retailers to provide local consumers in Hainan Province with the service of “return to the island for collection”. Before the implementation of the new policy, local customers could pick up duty-free goods at airports, ports and other island pickup points with their personal information after purchasing them from Duty Free shops. This process of picking up goods was relatively simple, but the inconvenience cost of carrying duty-free products to and from Hainan Island reduced consumers’ willingness to buy duty-free products. Consequently, in order to improve consumers’ shopping experience, more and more duty-free retailers provide the service of “return to the island for collection” to consumers through different sales channels. In practice, retailers like Hainan Tourism Duty Free shop offer this service for both online and offline channels, while China Duty Free Group and Global Premium Duty-Free Plaza (Haikou) only offer it for its offline channel. After the implementation of the new policy, local consumers choose to pick up duty-free goods at the point of return to the island when they purchase from offline or online channels. The duty-free retailers then package the products at the point of return for consumers to pick up after they return to the island. As a result of providing this service, the retailer reduces the inconvenience cost associated with transferring duty-free goods to and from Hainan Island for consumers, while at the same time it gives consumers a new way to shop, improving their shopping experience. There is, however, a new challenge for duty-free retailers in channel of operation strategies, as they will have to bear the additional hassle costs involved in retailers’ pick-up points, such as product accumulation costs or additional labor handling costs. Our research questions specifically concern whether duty-free retailers provide consumers with “return to the island for collection” services? If so, what is the most beneficial sales channel for retailers to provide this service? This study is new and interesting, which contributes to expanding the duty-free retailing and omnichannel retailing research. And the conclusions of this study can provide a reference for the duty-free retailer to implement new duty-free policies.
The study focuses on the duty-free retailer with an online and an offline channel based on new duty-free policies for outlying islands at Hainan Free Trade Port. Further, we examine consumers’ buying behavior, duty-free retailers’ optimal pricing decisions, and retailer channel operations. First, using the consumer utility theory, we build game-theoretical models and obtain the optimal strategies under three different channel strategies: the duty-free retailer does not provide “return to the island for collection” service (RN mode), the duty-free retailer only provides “return to the island for collection” for the offline channel (RS mode), and the duty-free retailer offers “return to the island for collection” service for both online and offline channels (RSO mode). Second, we explore the impacts of offering “return to the island for collection” on duty-free retailers by comparing their profits before and after providing this service. Then, we get the optimal channel operation strategy for the duty-free retailer by comparing the profits of the retailers who only provide “return to the island for collection” for offline channel and offer “return to the island for collection” service for both online and offline channels. Finally, we extend the model under which the retailer only provides “return to the island for collection” for the online channel and study the duty-free retailer’s optimal pricing decisions.
First, when the retailer’s additional profit or the cost of consumers carrying duty-free goods is low or moderate, but the hassle cost of retailers’ pick-up point is large, it will not be beneficial to the duty-free retailer to provide “return to the island for collection” service. Second, when the retailer’s additional profit is high or the hassle cost of retailers’ pick-up point is moderate, it will be more profitable to provide “return to the island forcollection” service only through the offline channel. Third, when the cost of consumers carrying duty-free goods is large or the hassle cost of retailers’ pick-up point is relatively low, it will be more profitable to provide “return to the island for collection” service through both online and offline channels. In summary, our results can provide a theoretical basis and decision-making reference for duty-free retailers’ channel operation strategies. However, the first limitation of this paper is that we only consider the channel operation strategy of a single duty-free retailer under the “return to the island for collection” policy. And the second limitation of this paper is that we only investigate the effects of “return to the island for collection” policy on duty-free retailer’s optimal decisions. The further research can be carried out on the operational decision of multiple duty-free retailers under the “return to the island for collection” policy or other new policies.

Key words: duty-free merchandise, pricing decision, “return to the island for collection”, channel management, game theory

摘要： 本文以海南自贸港离岛免税新政策“返岛提货”服务实践为研究背景,探讨了三种不同模式(免税零售商不提供“返岛提货”服务、仅线下渠道提供“返岛提货”服务、线上和线下渠道均提供“返岛提货”服务)下的消费者购买行为和零售商渠道运营策略。研究发现,当零售商的额外销售利润较高或返岛提货点处理成本适中时,零售商愿意仅在线下渠道提供该服务。当消费者携带免税品返岛的麻烦成本较高或返岛提货点处理成本较低时,零售商更愿意同时在线上和线下渠道提供该服务。而在其他情形下,免税零售商将不提供“返岛提货”服务。

关键词: 免税品, 定价策略, 返岛提货, 渠道管理, 博弈论