Marketing Letters

, Volume 7, Issue 4, pp 307–317 | Cite as

Controlling product returns in direct marketing

  • James D. Hess
  • Wujin Chu
  • Eitan Gerstner


Many direct marketers offer price refunds to unsatisfied consumers, but as a result some consumers order products with no intention of keeping them. We show that such inappropriate returns can be controlled in a profitable way by imposing nonrefundable charges and that these charges increase with the value of the merchandise ordered. Data collected from clothing mail-order catalogs is consistent with our theory. The shipping and handling charges of these catalogs are usually nonrefundable and increase with the value of the merchandise ordered, even when the actual shipping and handling costs are constant.


Shipping Marketing Actual Shipping Order Product Product Return 
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Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • James D. Hess
    • 1
  • Wujin Chu
    • 2
  • Eitan Gerstner
    • 3
    • 4
  1. 1.University of IllinoisChampaignUSA
  2. 2.School of ManagementSeoul National UniversitySeoulKorea
  3. 3.Graduate School of ManagementUniversity of California, DavisDavisUSA
  4. 4.University of HaifaIsrael

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