Report: Not all return policies created equal

Retailers that rely on lenient return policies to attract shoppers may want to think again, according to a new report from the University of Texas at Dallas. It seems not all return policies are created equal.

Researchers looked at how returns and purchases were affected by variations in return policies, looking at five elements: time, money, effort, scope and exchange.

The analysis is the first attempt to understand the return policy literature quantitatively and prove that lenient policies positively affect purchase and return decisions, according to UT Dallas doctoral candidate Ryan Freling.

"In general, firms use return policies to increase purchases but don't want to increase returns, which are costly," said Freling. "But all return policies are not the same."  

Policies considered to be the most lenient allow a longer return window, full refunds, less effort on the part of the customer, a wide scope of items that qualify for return and cash refunds rather than store exchanges.

Shoppers were more likely to purchase an item if a retailer had a lenient return policy. And the longer the window allowed for returns, the less likely a customer would bring it back.

"The cost of dealing with returns affects the bottom line," he said. "You want to look at the different dimensions of a return policy, because you may be able to manipulate the policy to achieve your goals."

For more:
-See this UT Dallas story

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