Return policy: Hassle‐free or your money‐back guarantee?

Hsiao, Liang‐Tsai; Chen, Ying‐Ju

doi:10.1002/nav.21591

Cited by 47 publications

(23 citation statements)

References 18 publications

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“…Overall, we find that segmenting the customer base into low and high types in terms of ex post product valuation is a commonly used representation of heterogeneity in the literature (Akçay et al, 2013;Hsiao & Chen, 2012;Hsiao & Chen, 2014, 2015Su, 2009). We can refer to this representation as imperfect ex post heterogeneity as customers are still homogeneous within each segment.…”

Section: Customer Heterogeneitymentioning

confidence: 81%

“…Hsiao and Chen () compare the performance of various return policy settings in the presence of product quality risk, heterogeneous valuations, and hassle costs for returning. The authors show that a return policy with a full refund and imposed hassles versus a hassle‐free return policy with a restocking fee lead to the same consumer behavioral outcomes for different customer segments.…”

Section: Analytical Researchmentioning

confidence: 99%

See 1 more Smart Citation

Taking stock of consumer returns: A review and classification of the literature

Abdulla

Ketzenberg

Abbey

2019

J of Ops Management

111

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Coincident with the rapid growth of consumer returns and their corresponding importance in the retail marketplace, academic interest in the area of consumer return policy design has significantly increased. In fact, the growth in academic publications has been tremendous, with almost half of the published works appearing within the past 6 years. The influx of new and evolving research spans across multiple disciplines and various methodologies. To provide clarity for the continued evolution of the field, we provide a comprehensive review and classification of the literature predicated on a holistic conceptual framework. The scope of the review includes all peer reviewed journal articles published prior to the end of 2018, along with any working papers cited therefrom, that specifically address (a) managerial decision‐making related to return policies or (b) consumer behavior in response to such decision‐making. Examining the state of the literature and practice on return policy design through the lens of a unified conceptual framework—a framework that spans both analytical and empirical research—reveals numerous managerial and theoretical opportunities for future research.

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Section: Customer Heterogeneitymentioning

confidence: 81%

Section: Analytical Researchmentioning

confidence: 99%

Taking stock of consumer returns: A review and classification of the literature

Abdulla

Ketzenberg

Abbey

2019

J of Ops Management

111

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“…Several existing works on retail operations management assume that when product mismatch occurs, consumers could accept the refund amount, such as Davis et al. (), Choi (), Hsiao and Chen (), and Gu and Tayi (). In a supply chain environment, Hu et al.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Several existing works on retail operations management assume that when product mismatch occurs, consumers could accept the refund amount, such as Davis et al (1995), Choi (2013), Hsiao and Chen (2014), and Gu and Tayi (2015). In a supply chain environment, Hu et al (2014) investigate two consignment inventory policies (retailer and vendor managed), with and without returns policy, and find that it is beneficial for two parties to choose the vendor-managed inventory.…”

Section: Returns Handling Strategymentioning

confidence: 99%

Ordering and returns handling decisions and coordination in a supply chain with demand uncertainty

Liu

Xiao

Tian

et al. 2018

Int Trans Operational Res

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We develop a newsvendor model to study the retailer's order quantity, the manufacturer's returns handling strategy, and channel coordination. The manufacturer chooses one of two returns handling strategies: manufacturer handling or retailer handling under the coordinated and decentralized scenarios, respectively. Under the coordinated scenario, we find that when consumer's returns handling cost under manufacturer handling or the manufacturer's returns handling cost is small, consumer returns should be handled by the manufacturer. Under the decentralized scenario, when the retailer's returns handling cost or the consumer's returns handling cost under retailer handling is low, the manufacturer will choose manufacturer handling; both the manufacturer and the retailer may be better off using manufacturer handling (a win–win situation). The impact of the returns handling strategy on the retailer's ordering quantity largely depends on its effect on the consumer's returns handling cost. Finally, we also design buyback contracts to coordinate the supply chain and find that both wholesale price and buyback price under manufacturer handling are higher than those under retailer handling.

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“…Horizontal duopoly with exchanges Shang, Ghosh, and Galbreth (2017a) Opportunistic consumers Ketzenberg and Zuidwijk (2009) Joint order quantity and restocking fee decision Akçay, Boyacı, and Zhang (2013) Joint order quantity and restocking fee with open box sales Hsiao and Chen (2012) Quality risk McWilliams (2012) Vertical duopoly Hsiao and Chen (2014) Explicit restocking fee versus a hassle cost Su (2009); Crocker and Letizia (2014) Supply chain contracting Hsiao and Chen (2015) Decision to refuse returns Altug and Aydinliyim (2016) Strategic consumers and markdown pricing Alptekinoglu and Grasas (2014) Assortment planning with returns…”

Section: Introductionmentioning

confidence: 99%

Where Should I Focus My Return Reduction Efforts? Empirical Guidance for Retailers

2018

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Owing to the generous refund policy ubiquitous among today's retailers, returns are prevalent and expensive to manage. Implementing buyer assistance programs and adjusting return time windows are two common methods that retailers use to actively influence return rates. A buyer assistance program can improve consumer understanding and reduce returns, but to be effective it must be focused on the products that are most likely to be returned. Managing return rates by adjusting return time windows, on the other hand, requires an understanding of the time dimension of returns, a topic for which there is scant guidance in the literature. Using a large dataset of consumer electronics purchases and returns for a major U.S. retailer, our study contributes to the research and practice of retail operations by: (i) providing new insights into the drivers of product returns and (ii) analyzing the time length of consumers' product trial, which can inform return time window decisions. We show that both product maturity (where a product stands in its life‐cycle) and variety (the number of competing alternatives) are negatively associated with the probability of a return. By separating pure returns and exchanges, we further demonstrate that while more variety considerably reduces the former, it only marginally increases the latter. In addition, we find that consumers with more past returns not only have a higher probability of future returns but also tend to make late returns, with both factors increasing a retailer's cost to serve them. Finally, our analysis of the time to return shows that retailers may benefit from customizing their return time windows across different product categories, as well as enlarging the window during holidays.

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Return policy: Hassle‐free or your money‐back guarantee?

Cited by 47 publications

References 18 publications

Taking stock of consumer returns: A review and classification of the literature

Taking stock of consumer returns: A review and classification of the literature

Ordering and returns handling decisions and coordination in a supply chain with demand uncertainty

Where Should I Focus My Return Reduction Efforts? Empirical Guidance for Retailers

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