Consumers’ Legitimate and Opportunistic Product Return Behaviors: An Extended Abstract

Abstract

Product return is a necessary part of the exchange/transaction process between buyers and sellers, which, however, also erodes firm profits. Product returns cost US manufacturers and retailers approximately $100 billion annually in lost sales through reboxing, restocking, and reselling, reducing profits by 3.8 % on average per retailer or manufacturer (Blanchard 2007; Petersen and Kumar 2009; Petersen and Kumar 2012). Due to an increasing return policy abuse and return rate, many firms have altered their generous return policies to restrictive return policies to protect profits. However, it’s suggested that the restrictive return policy could also reduce customer satisfaction, increase the perceived risk, and thus negatively affect customers’ decision-making (Petersen and Kumar 2009). Therefore, even though manufacturers and retailers hate product returns, smart companies are accepting them as bitter pills to be swallowed (Petersen and Kummar 2012). In other words, having a restrictive return policy is not a solution.