Search overlay

Search form




        College, Research

        `Tis the season of many happy returns

        December 14, 2017 By Joe McAdory

        All News


        Amid the carnage of Christmas morning, the crumpled-up balls of wrapping paper tossed about during the frenzy of gift-opening, there will undoubtedly be at least one present that will miss the mark.

        It could be the one from your aunt who, for all of her great qualities, buys gifts as if she still thinks you’re 9-years-old. The padded-foot pajamas fit a bit snug and came in a hideous shade of lime green, so you’ll want to return them ASAP and exchange them for something you will actually wear.

        Unhappy gift recipientHere’s where it gets dicey: She purchased your gift online … in mid-October.  A 30-day return policy means you could be stuck with them – provided you didn’t binge on holiday cookies. A 90-day return policy means you never have to see them again.

        The fine print contained in return policies absolutely matters at this time of year. Brick-and-mortar stores aren’t obsolete. But, according to CNET’s annual holiday shopping survey, nearly 70 percent of consumers were expected to purchase most of their gifts online this year. Nearly 90 percent of us browsed through the assortment of deals offered online through “Cyber Monday” promotions, according to the study.

        For all of our efforts to find the right gift, however, we will miss the mark from time to time – wrong color, wrong size, wrong brand. According to Harbert College of Business researchers, it’s in the best interest of online retailers to accommodate gift-buyers and recipients who find themselves contemplating merchandise returns.

        Supply chain professor Shashank Rao, management professor Brian Connelly and business analytics professor Kang Bok Lee found that extended product return times produce highly favorable results for online retailers. Their paper – “Return Time Leniency in Online Retail: A Signaling Theory Perspective on Buying Outcomes” – reveals that liberal return policies attract more customers and prove particularly beneficial in building customer trust, which turns a potential one-time transaction into a long-term relationship.

        “You can sell an item for a higher amount by liberalizing a return policy than if you tried to sell it with a very stringent return policy,” Rao said. “The argument that comes out of this is – if you are a retailer – you could make money off of a liberal return policy.”

        Customers may be willing to pay a higher price for a particular item if they believe they are getting peace of mind and a hassle-free experience as part of the deal. The researchers found that consumers pay close attention to the specifications of online retail return policies. They found that 66 percent review the policies before making a purchase, with the return rate of online purchases coming in at 22 percent.

        “This liberal [extended] return policy sends a signal to the buyer that says, `You know what? Maybe this is a product where I don’t need to be worried because the seller doesn’t have anything to hide,” Rao said.

        Whether you’re shopping online, at a big box store or a neighborhood boutique, it’s important to ask the vendor about the product warranty, as well as the return, refund and exchange policies. In the case of the lime green, padded-foot pajamas that fit a bit too tight, you’re lucky the online retailer offers that 90-day return window. If only your aunt could find that gift receipt …