Return Shipping Policies of Online Retailers: Normative Assumptions and the Long-Term Consequences of Fee and Free Returns

Abstract

To limit costs associated with product returns, some online retailers have instituted equity-based return shipping policies, requiring customers to pay to return products when retailers determine that customers are at fault. The authors compare the normative assumptions about customers that underlie equity-based return shipping policies with the more realistic, positivist expectations as predicted by attribution, equity, and regret theories. Two longitudinal field studies over four years using two surveys and actual customer spending data indicate that retailer confidence in those normative assumptions is unjustified. Contrary to retailer assumptions, neither the positive consequences of free returns nor the negative consequences of fee returns were reversed when customer perceptions of fairness were taken into account. Depending on the locus and extent of blame, customers who paid for their own return decreased their postreturn spending at that retailer 75%-100% by the end of two years. In contrast, returns that were free to the consumer resulted in postreturn customer spending that was 158%-457% of prereturn spending. The findings suggest that online retailers should either institute a policy of free product returns or, at a minimum, examine their customer data to determine their customers' responses to fee returns.

Analyzing E-Commerce Websites: A Quali-Quantitive Approach for the User Perceived Web Quality (UPWQ)

“…Could be useful consider the difference with "Free return" i.e., the ability to return purchased goods for free (there are not return shipping costs). It is considered a not very relevant factor (Bower & Maxham, 2012). Meng and Rong (2015) argued that many e-commerce websites offer free shipping to their customers as an additional service, because this factor has a positive effect on the conversion rate (i.e., the percentage of buyer among all the visitors).…”

Consumer Markets in Closed-Loop Supply Chains

“…Griffis et al (2012) describe how returns management can serve as a competitive edge to increase sales over time, particularly in online channels. Similarly, Bower and Maxham (2012) show that return policies can actually benefit long-term profitability by inducing greater customer loyalty after a perceived failure.…”

Developments and Classifications of Online Shopping Behavior in Germany

“…Bower & Maxham, 2012;Petersen & Kumar, 2009). Consumers of fashion goods in online trade have only the possibility to examine products personally or to try them on as soon as the order is delivered.…”