Return Avoidance in Online Shopping: The Role of Return Credits and Purchase-risk Notices

Abstract

Online shopping is increasingly becoming a global phenomenon. However, with the boom of online shopping, a large number of products returned by customers are redirected to e-retailers. These returns bring serious negative consequences. For example, mass returns affect an e-retailer's costs, operations, reputation, and more. Eretailers are looking for approaches to reduce the negative consequences caused by online returns. This thesis hopes to deal with these negative consequences by developing return avoidance. Specifically, this thesis mainly involves two studies: return credits and purchase-risk notices (PRNs). Through these two studies, this thesis explores the effectiveness and side effects of return credits and PRNs in return avoidance. The first study discusses the role of return credits in return avoidance. As one of the most common reasons for online returns, returns for satisfaction-related reasons are receiving a lot of attention. This study attempted to explore the use of return credits (maximum free return amounts) to reduce satisfaction-related returns. Unlike the full or partial return policies mentioned in the previous literature, this novel approach has its characteristics and roles. At the same time, the study also explored the side effects of using return credits. In terms of experimental design, this study employed one-factor (return credit: high vs. low) between-subjects scenario experiment. Analysis of variance (ANOVA) was used to test hypotheses. The results of this study revealed that the use of return credits significantly deters satisfactionrelated returns, with high and low credit amounts having a similar effect on returns. In addition, the results of this study also showed that the side effects caused by high credit amounts were weaker than those with low amounts. The second study discusses the role of PRNs in return avoidance. Due to the limitations inherent in online shopping, what customers see online and what they receive may not match. Online returns caused by this mismatch are an important reason for customers to initiate returns. This study discusses the use of PRNs by eretailers for possible mismatches as a pre-emptive action to avoid returns. According to the two stages of pre-purchase and post-purchase, this study conducted two onefactor (purchase-risk notice: presence vs. absence) scenario experiments. The study examined the pre-purchase and post-purchase effects of PRNs separately. One-way ANOVA was used to test hypotheses. The results of two studies found that the use of PRNs can avoid returns without negatively impacting consumers' purchase intention. Additionally, using PRNs can make consumers more tolerant of slight mismatches, attracting more repurchases, and reducing consumer dissatisfaction and regret about purchase decisions. In conclusion, the studies in this thesis are important and valuable. On the one hand, the two studies broaden the academic research in the field of return avoidance, and subsequent research can continue to explore return avoidance based on these studies. On the other hand, the findings in this thesis provide tools for retailers to reduce online returns. These two return avoidance measures can not only effectively reduce returns but also have fewer side effects. Both future academic research and eretailers can benefit from the research findings in this thesis.