Skip to main content

Managing Product Returns Within the Customer Value Framework

  • Chapter
  • First Online:
Customer Engagement Marketing

Abstract

Customers can create value to the firm by purchasing products, not returning these products, recommending products to other potential customers, influencing other customers, and providing feedback to the company. In this chapter, we first discuss how product returns and engagement behaviors can be included in the customer value framework. Second, we discuss the antecedents of a customer’s product return decision, namely, return policies, information at the moment of purchase, and customer and product characteristics. Third, we focus on the consequences of product returns: the effects on future purchase and product return behavior, as well as on customer engagement behaviors. Thus, this chapter provides a comprehensive synthesis of current knowledge on antecedents and consequences of product returns and how this relates to measuring and managing customer value.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 189.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 249.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 249.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Akcay, Y., Boyaci, T., & Zhang, D. (2013). Selling with Money-Back Guarantees: The Impact on Prices, Quantities, and Retail Profitability. Production and Operations Management, 22(4), 777–791.

    Article  Google Scholar 

  • Altug, M. S., & Aydinliyim T. (2016). Counteracting Strategic Purchase Deferrals: The Impact of Online Retailers’ Return Policy Decisions. Manufacturing & Service Operations Management, 18(3), 376–392.

    Google Scholar 

  • Anderson, E. T., Hansen, K., & Simester, D. (2009a). The Option Value of Returns: Theory and Empirical Evidence. Marketing Science, 28(3), 405–423.

    Article  Google Scholar 

  • Anderson, E. T., Hansen K., Simester D., & Wang L. K. (2009b). How Price Affects Returns: The Perceived Value and Incremental Customer Effects (Working paper). Kellogg School of Management, Northwestern University.

    Google Scholar 

  • Babic, A., Sotgiu, F., de Valck, K., & Bijmolt, T. H. A. (2016). The Effect of Electronic Word of Mouth on Sales: A Meta-Analytic Review of Platform, Product, and Metric Factors. Journal of Marketing Research, 53(3), 297–318.

    Article  Google Scholar 

  • Banjo, S. (2013, December 22). Rampant Returns Plague E-retailers. The Wall Street Journal. http://online.wsj.com/news/articles/SB10001424052702304773104579270260683155216. Last Accessed 23 June 2014.

  • Bechwati, N. N., & Siegal, W. S. (2005). The Impact of the Prechoice Process on Product Returns. Journal of Marketing Research, 42(3), 358–367.

    Article  Google Scholar 

  • Blanchard, D. (2007). Supply Chains also Work in Reverse. Industry Week.

    Google Scholar 

  • Bonifield, C., Cole, C., & Schultz, R. L. (2010). Product Returns on the Internet: A Case of Mixed Signals? Journal of Business Research, 63(9), 1058–1065.

    Article  Google Scholar 

  • Bower, A. B., & Maxham, J. G., III. (2012). Return Shipping Policies of Online Retailers: Normative Assumptions and the Long-Term Consequences of Fee and Free Returns. Journal of Marketing, 76(5), 110–124.

    Article  Google Scholar 

  • Chen, Y., & Xie, J. (2008). Online Consumer Review: Word-of-Mouth as a New Element of Marketing Communication Mix. Management Science, 54(3), 477–491.

    Article  Google Scholar 

  • Court, D., Elzinga, D., Mulder, S., & Vetvik, O. J. (2009). The Customer Decision Journey. McKinsey Quarterly, 3, 96–107.

    Google Scholar 

  • Davis, S., Gerstner, E., & Hagerty, M. (1995). Money Back Guarantees in Retailing: Matching Products to Consumer Tastes. Journal of Retailing, 71(1), 7–22.

    Article  Google Scholar 

  • Davis, S., Hagerty, M., & Gerstner, E. (1998). Return Policies and the Optimal Level of “Hassle”. Journal of Economics and Business, 50(5), 445–460.

    Article  Google Scholar 

  • De, P., Hu, Y., & Rahman, M. S. (2013). Product-Oriented Web Technologies and Product Returns: An Exploratory Study. Information Systems Research, 24(4), 998–1010.

    Article  Google Scholar 

  • De Langhe, B., Fernbach P. M., & Lichtenstein D. R. (2016). Navigating by the Stars: Investigating the Actual and Perceived Validity of Online User Ratings. Journal of Consumer Research, forthcoming.

    Google Scholar 

  • Dekker, R., Fleischmann M., Inderfurth K., & van Wassenhove L. N. (2004). Reverse Logistics: Quantitative Models for Closed-Loop Supply Chains. Berlin/New York: Springer.

    Google Scholar 

  • Forrester. (2015, March 2). Forrester Research: The State of Retailing Online 2015: Key Metrics, Initiatives, and Mobile Benchmarks, Media Release (Accessed 25 May 2016). https://www.apteligent.com/wp-content/uploads/2015/10/The_State_Of_Retailing_On-1.pdf. Last Accessed 26 February 2016.

  • Gartner. (2014). Returns—The Ticking Time-Bomb of Multichannel Retailing. https://www.gartner.com/doc/2849018/returns--ticking-time-bomb. Last Accessed 25 May 2016.

  • Griffis, S. E., Rao, S., Goldsby, T. J., & Niranjan, T. T. (2012). The Customer Consequences of Returns in Online Retailing: An Empirical Analysis. Journal of Operations Management, 30(4), 282–294.

    Article  Google Scholar 

  • Gu, Z. J., & Tayi, G. K. (2015). Consumer Mending and Online Retailer Fit-Uncertainty Mitigating Strategies. Quantitative Marketing and Economics, 13(3), 251–282.

    Article  Google Scholar 

  • Guide, V., Daniel, R., Souza, G. C., Van Wassenhove, L. N., & Blackburn, J. D. (2006). Time Value of Commercial Product Returns. Management Science, 52(8), 1200–1214.

    Article  Google Scholar 

  • Hess, J. D., & Mayhew, G. E. (1997). Modeling Merchandise Returns in Direct Marketing. Journal of Direct Marketing, 11(2), 20–35.

    Article  Google Scholar 

  • Hong, Y., & Pavlou, P. A. (2014). Product Fit Uncertainty in Online Markets: Nature, Effects, and Antecedents. Information Systems Research, 25(2), 328–344.

    Article  Google Scholar 

  • Hu, W., Li, Y., & Govindan, K. (2014). The Impact of Consumer Return Policies on Consignment Contracts with Inventory Control. European Journal of Operations Research, 233(2), 398–407.

    Article  Google Scholar 

  • Inderst, R., & Tirosh, G. (2015). Refunds and Returns in a Vertically Differentiated Industry. International Journal of Industrial Organization, 38(1), 44–51.

    Article  Google Scholar 

  • Janakiraman, N., & Ordóñez, L. (2012). Effect of Effort and Deadlines on Consumer Product Returns. Journal of Consumer Psychology, 22(2), 260–271.

    Article  Google Scholar 

  • Janakiraman, N., Syrdal, H. A., & Freling, R. (2016). The Effect of Return Policy Leniency on Consumer Purchase and Return Decisions: A Meta-Analytic Review. Journal of Retailing, 92(2), 226–235.

    Article  Google Scholar 

  • Kerr, J. C. (2013, August 12). Buyers Beware: Retailers Track Serial Returners. NBC Today. http://www.today.com/money/serial-returners-beware-retailers-are-tracking-you-6C10900265. Last Accessed 20 Mar 2016.

  • Kostyra, D. S., Reiner, J., Natter, M., & Klapper, D. (2016). Decomposing the Effects of Online Customer Reviews on Brand, Price and Product Attributes. International Journal of Research in Marketing, 33(1), 11–26.

    Article  Google Scholar 

  • Kumar, V., Aksoy, L., Donkers, B., Venkatesan, R., Wiesel, T., & Tillmanns, S. (2010a). Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value. Journal of Service Research, 13(3), 297–310.

    Article  Google Scholar 

  • Kumar, V., Petersen, J. A., & Leone, R. P. (2010b). Driving Profitability by Encouraging Customer Referrals: Who, When, and How. Journal of Marketing, 74(5), 1–17.

    Article  Google Scholar 

  • Lemon, K. N., & Verhoef, P. C. (2016). Understanding Customer Experience Throughout the Customer Journey. Journal of Marketing, 80(6), 69–96.

    Article  Google Scholar 

  • Minnema, A., Bijmolt, T. H. A., Gensler, S., & Wiesel, T. (2016). To Keep or Not to Keep: Effects of Online Customer Reviews on Product Returns. Journal of Retailing, 92(3), 253–267.

    Article  Google Scholar 

  • Mollenkopf, D. A., Rabinovich, E., Laseter, T. M., & Boyer, K. K. (2007). Managing Internet Product Returns: A Focus on Effective Service Operations. Decision Sciences, 38(2), 215–250.

    Article  Google Scholar 

  • Moorthy, S., & Srinivasan, K. (1995). Signaling Quality with a Money-Back Guarantee: The Role of Transaction Costs. Marketing Science, 14(4), 442–466.

    Article  Google Scholar 

  • Petersen, J. A., & Kumar, V. (2009). Are Product Returns a Necessary Evil? Antecedents and Consequences. Journal of Marketing, 73(3), 35–51.

    Article  Google Scholar 

  • Petersen, J. A., & Kumar, V. (2010). Can Product Returns Make You Money? MIT Sloan Management Review, 51(3), 85–89.

    Google Scholar 

  • Petersen, J. A., & Kumar, V. (2015). Perceived Risk, Product Returns, and Optimal Resource Allocation: Evidence from a Field Experiment. Journal of Marketing Research, 52(2), 268–285.

    Article  Google Scholar 

  • Reinartz, W. J., & Kumar, V. (2003). The Impact of Customer Relationship Characteristics on Profitable Lifetime Duration. Journal of Marketing, 67(1), 77–99.

    Article  Google Scholar 

  • Sahoo, N., Dellarocas, C., & Srinivasan, S. (2016). The Impact of Online Product Reviews on Product Returns. MSI Working Paper Series, 16–101.

    Google Scholar 

  • Schulze, C., & Srinivasan, S. (2016). Managing Product Returns for Multinational Online Retailers. Paper Presented at the 2016 Informs Marketing Science Conference.

    Google Scholar 

  • Shah, D., Kumar, V., Yingge, Q., & Chen, S. (2012). Unprofitable Cross-buying: Evidence from Consumer and Business Markets. Journal of Marketing, 76(3), 78–95.

    Article  Google Scholar 

  • Shah, D., Kumar, V., & Kim, K. H. (2014). Managing Customer Profits: The Power of Habits. Journal of Marketing Research, 51(6), 726–741.

    Article  Google Scholar 

  • Shulman, J. D., Coughlan, A. T., & Canan Savaskan, R. (2009). Optimal Restocking Fees and Information Provision in an Integrated Demand-Supply Model of Product Returns. Manufacturing & Service Operations Management, 11(4), 577–594.

    Article  Google Scholar 

  • Shulman, J. D., Coughlan, A. T., & Canan Savaskan, R. (2010). Optimal Reverse Channel Structure for Consumer Product Returns. Marketing Science, 29 (6), 1071–1085.

    Article  Google Scholar 

  • Shulman, J. D., Coughlan, A. T., & Canan Savaskan, R. (2011). Managing Consumer Returns in a Competitive Environment. Management Science, 57 (2), 347–362.

    Article  Google Scholar 

  • Shulman, J. D., Cunha, M., Jr., & Saint Clair, J. K. (2015). Consumer Uncertainty and Purchase Decision Reversals: Theory and Evidence. Marketing Science, 34(4), 590–605.

    Article  Google Scholar 

  • Su, X. (2009). Consumer Returns Policies and Supply Chain Performance. Manufacturing & Service Operations Management, 11(4), 595–612.

    Article  Google Scholar 

  • Van Doorn, J., Lemon, K. N., Mittal, V., Nass, S., Pick, D., Pirner, P., & Verhoef, P. C. (2010). Customer Engagement Behavior: Theoretical Foundations and Research Directions. Journal of Service Research, 13(3), 253–266.

    Article  Google Scholar 

  • Wood, S. L. (2001). Remote Purchase Environments: The Influence of Return Policy Leniency on Two-Stage Decision Processes. Journal of Marketing Research, 38(2), 157–169.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2018 The Author(s)

About this chapter

Cite this chapter

Minnema, A., Bijmolt, T.H.A., Petersen, J.A., Shulman, J.D. (2018). Managing Product Returns Within the Customer Value Framework. In: Palmatier, R., Kumar, V., Harmeling, C. (eds) Customer Engagement Marketing. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-61985-9_5

Download citation

Publish with us

Policies and ethics