The role of physical distribution services as determinants of product returns in Internet retailing

Abstract

a b s t r a c tPressure continues to build on Internet retailers to squeeze out inefficiencies from their day-to-day operations. One major source of such inefficiencies is product returns. Indeed, product returns in Internet retailing have been shown to be, on average, as high as 22% of sales. Yet, most retailers accept them as a necessary cost of doing business. This is not surprising since many retailers do not have a clear understanding of the causes of product returns. While it is known that return policies of retailers, along with product attributes, are two important factors related to product return incidents, little is known about which aspects of the online retail transaction make such a purchase more return-prone. In the current study, we seek to address this issue. We use a large data set of customer purchases and returns to identify how process attributes in physical distribution service (PDS) influence product returns. The first attribute involves perceptions of scarcity conditions in inventory availability among consumers when retailers reveal to consumers information on inventory levels for the products that they intend to buy. Our results show that orders in which items are sold when these conditions are revealed to shoppers have a higher likelihood of being returned than orders in which these conditions are not revealed. While prior research has argued that inventory scarcity perceptions have an effect on purchases, our findings suggest that they are also related to the likelihood of these purchases being returned. The second attribute involves the reliability in the delivery of orders to consumers. We find that the likelihood of orders being returned depends on the consistency between retailer promises of timeliness in the delivery of orders and the actual delivery performance of the orders. Moreover, we find that the effect that consistency in the delivery has in the likelihood of returns, is stronger for orders that involve promises for expedited delivery than for orders with less expeditious promises. That is, although the occurrence of returns depends on the delays in the delivery of orders to consumers relative to the initial promises made by the retailers, this effect is more notable for orders that involve promises of fast delivery.

To be or not to be (loyal): Is there a recipe for customer loyalty in the B2B context?

“…Developing a competency in handling product returns can be an important part of a firm's supply chain strategy and can help transform returns into a profit center just because through improved returns management suppliers can better address customer complaints (Jayaraman & Luo, 2007;Rao, Rabinovich, & Raju, 2014). In industrial marketing there are few studies focusing on the impact of complaint handling when managing product returns.…”

Modèles d’affaires, logistique et innovation : le cas du e-commerce

“…Les activités analysées sont la gestion de stock (Kull et al, 2013 ;Taylor et al, 2004 ;Rabinovich 2003Rabinovich , 2004Rabinovich , 2011, les retours (Mollenkopf et al, 2007 ;Rao et al, 2014, Kokkinaki et al, 1999, le management des systèmes d'information (Waller and Fawcett, 2013 ;Wang, 2008Sanders, 2007).…”

Teaching the Mechanism of Horizontal and Vertical Supply Chain Coordination

“…And the marginal effect increases. Customer return rate is influenced by many factors such as the quality of product, the type of product, and sales channels (Jiang and Rosenbloom, 2005;Rao et al, 2014). In this example, we assume the higher customer return rate in Figure 2 is mainly influenced by the type of product or sales channels given the assumption that customer return rate doesn't influence the future customer demand of the product.…”