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The effects of out-of-stock, return, and cancellation amounts on the order amounts of an online retailer

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  • Son, Junghwa
  • Kang, Ji Hye
  • Jang, Sungha

Abstract

Despite the spectacular success of online retailers in recent decades, some inherent weaknesses, including out-of-stock, returns, and order cancellations, still negatively influence the financial performance of online retailers. The aims of this study are: 1) to examine the effects of these undesirable sales situations on the financial performance (in this study, the order amounts) of an online retailer; and 2) to investigate the moderating effects of price ranges (low, medium, and high) on the relationships of these undesirable sales situations with financial performance. A total of 2484 transaction data sets involving 260 brands obtained from an online fashion retailer are used to test the proposed hypotheses. In the pooled model, out-of-stock amounts have a negative impact, return amounts have no impact, and cancellation amounts have a positive impact on order amounts. Interestingly, however, these relationships vary with price groups, which verifies the moderating effects of price groups. Our findings provide new insights into managing undesirable sales situations by price group.

Suggested Citation

  • Son, Junghwa & Kang, Ji Hye & Jang, Sungha, 2019. "The effects of out-of-stock, return, and cancellation amounts on the order amounts of an online retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 421-427.
    • Handle: RePEc:eee:joreco:v:51:y:2019:i:c:p:421-427
    DOI: 10.1016/j.jretconser.2019.02.008
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    7. Ezhil Kumar, Madhumitha & Sharma, Dheeraj P. & Tapar, Archit V., 2021. "Out-of-stock justifications and consumers’ behavioral outcomes– exploring the role of product type and sales level information in out-of-stock situations," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).

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