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Effectiveness of product return-prevention instruments: Empirical evidence

Author

Listed:
  • Gianfranco Walsh

    (Friedrich-Schiller-Universität Jena)

  • Michael Möhring

    (Friedrich-Schiller-Universität Jena
    Faculty of Computer Science and Mathematics)

Abstract

The convenience and ease of online shopping reduce consumers’ risk perceptions, which encourages the continued growth of online retailing but also may force online retailers to deal with expensive and excessively high product return rates. Despite efforts by e-commerce management practitioners and scholars to identify determinants of customer product return behavior, scarce research investigates the effectiveness of instruments designed explicitly to reduce customers’ actual return rates. Drawing on risk theory, this article tests the influence of three important instruments on product return prevention. Three separate field experiments among customers of a well-known European online retailer reveal, unexpectedly, that the use of a money-back guarantee increases product returns, whereas product reviews decrease the product return rate. The provision of free return labels has no influence on customer product return behavior. This article concludes with some managerial and theoretical implications of these results.

Suggested Citation

  • Gianfranco Walsh & Michael Möhring, 2017. "Effectiveness of product return-prevention instruments: Empirical evidence," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(4), pages 341-350, November.
    • Handle: RePEc:spr:elmark:v:27:y:2017:i:4:d:10.1007_s12525-017-0259-0
    DOI: 10.1007/s12525-017-0259-0
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    References listed on IDEAS

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    Cited by:

    1. Bijmolt, Tammo H.A. & Broekhuis, Manda & de Leeuw, Sander & Hirche, Christian & Rooderkerk, Robert P. & Sousa, Rui & Zhu, Stuart X., 2021. "Challenges at the marketing–operations interface in omni-channel retail environments," Journal of Business Research, Elsevier, vol. 122(C), pages 864-874.
    2. Dailey, Lynn C. & Ülkü, M. Ali, 2018. "Retailers beware: On denied product returns and consumer behavior," Journal of Business Research, Elsevier, vol. 86(C), pages 202-209.
    3. Huang, Shupeng & Potter, Andrew & Eyers, Daniel & Li, Qinyun, 2021. "The influence of online review adoption on the profitability of capacitated supply chains," Omega, Elsevier, vol. 105(C).
    4. Piccolo, Salvatore & Pignataro, Aldo, 2018. "Consumer loss aversion, product experimentation and tacit collusion," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 49-77.
    5. Sharma, Dheeraj & Pandey, Shivendra, 2020. "The role payment depreciation in short temporal separations: Should online retailer make customers wait?," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    6. von Zahn, Moritz & Bauer, Kevin & Mihale-Wilson, Cristina & Jagow, Johanna & Speicher, Max & Hinz, Oliver, 2022. "The smart green nudge: Reducing product returns through enriched digital footprints & causal machine learning," SAFE Working Paper Series 363, Leibniz Institute for Financial Research SAFE, revised 2022.
    7. Rainer Alt, 2017. "Electronic markets on transaction costs," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(4), pages 297-301, November.

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    More about this item

    Keywords

    E-commerce; Money-back guarantee; Online shopping; Prevention instruments; Product returns; Product reviews;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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