Share Weal and Woe: Should Online Retail Platforms Introduce Return Shipping Insurance Through Independent or Dependent Insurers?

Global retail e-commerce sales have surged, yet product fit uncertainty remains a significant challenge, leading to rising product return rates. To address consumer concerns about return shipping costs, major Chinese online retail platforms have introduced return shipping insurance (RSI). Retailers can choose between Retailer-RSI (RRSI), which is provided by the retailer, and Customer-RSI (CRSI), which is purchased by consumers. Despite these options, information asymmetry causes insurers to assess return rates with bias—referred to as managerial confidence bias. Consequently, platforms are increasingly partnering with insurers to enhance their RSI offerings. This study develops a game-theoretical model to examine the dynamics between a platform and an insurer, as well as the impact of managerial confidence bias on RSI strategies. Our analysis reveals that the platform–insurer relationship is crucial in determining the optimal RSI strategy. Under an independent insurer, RSI is viable only if the insurer underestimates product return rates (i.e., exhibits overconfidence bias); RRSI is preferred if the bias is sufficiently strong, whereas CRSI is chosen otherwise. In contrast, under a dependent insurer, CRSI is favored by the retailer only when its return handling costs are substantially high; otherwise, RRSI is preferred. Furthermore, RSI consistently increases consumer surplus by reducing return hassle costs while only mildly raising the product price. However, the independent insurer’s bias leads to its own profit loss, resulting in a “loss–win–win–win” scenario across stakeholders. In contrast, the dependent insurer, supported by platform subsidies, can yield a “win–win–win–win” outcome that aligns stakeholder interests and enhances long-term platform benefits.