Skip to main content

A Review: Customer Returns in Fashion Retailing

  • Chapter
  • First Online:

Part of the book series: Springer Series in Fashion Business ((SSFB))

Abstract

Customer returns are a common practice in the retail industry. Due to the unique characteristics of fashion retailing, including short product life cycle, high returns rates, fraudulent returns, and low salvage value, customer returns are critical to fashion retailers. In this paper, we briefly discuss issues related to customer returns in fashion retailing. We then review the studies in the literature considering the impact of customer returns policies, methods of reducing customer returns, and management decisions related to customer returns, as these topics relate to or can be applied to the fashion retailing industry. We finish with a discussion of future research directions on managing customer returns in the fashion retail industry.

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

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
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

Learn about institutional subscriptions

References

  • Acquisti A, Varian HR (2005) Conditioning prices on purchase history. Mark Sci 24(3):367–381

    Article  Google Scholar 

  • Ahangarkolaei HE, Zandi MZ (2010) Using revenue management in multiproduct production-inventory systems: a survey study. Master’s Thesis, Linköping University

    Google Scholar 

  • Alptekinoglu A, Grasas A (2014) When to carry eccentric products? Optimal retail assortment under consumer returns. Prod Oper Manage 23(5):877–892

    Article  Google Scholar 

  • Anderson ET, Hansen K, Simister D, Wang LK (2006) How are demand and returns related? Theory and empirical evidence. Working paper, Kellogg School of Management

    Google Scholar 

  • Autry CW (2005) Formalization of reverse logistics programs: a strategy for managing liberalized returns. Ind Mark Manage 34(7):749–757

    Article  Google Scholar 

  • Aydin G, Ziya S (2009) Technical note: Personalized dynamic pricing of limited inventories. Oper Res 57(6):1523–1531

    Article  Google Scholar 

  • Bahn KD, Boyd E (2014) Information and its impact on consumers’ reactions to restrictive return policies. J Retail Consum Serv 21(4):423–425

    Article  Google Scholar 

  • Banjo S (2013) Rampant returns plague e-retailers. Wall Street J Dec 22

    Google Scholar 

  • Barry C (2000) Happy returns: how to reduce customer returns-and their costs. Catalog Age, Nov 2000, 17, 12; ABI/INFORM Global, pp 108–110

    Google Scholar 

  • Bernon M, Rossi S, Cullen J (2011) Retail reverse logistics: a call and grounding framework for research. Int J Phys Distrib Logistics Manage 41(5):484–510

    Article  Google Scholar 

  • Bhatnagar A, Misra S, Rao HR (2000) On risk, convenience, and internet shopping behaviour. Commun ACM 43(11):98–105

    Article  Google Scholar 

  • Biederman D (2005) Many happy returns. J Commer. Dec 5, 1–3 (New York)

    Google Scholar 

  • Bonifield C, Cole C, Schultz RL (2010) Product returns on the internet: a case of mixed signals? J Bus Res 63(9–10):1058–1065

    Article  Google Scholar 

  • Boyaci T, Gallego G (2004) Supply chain coordination in a market with customer service competition. Prod Oper Manage 13(1):3–22

    Article  Google Scholar 

  • Cecilio D (2015) E-commerce is changing the fashion industry—it’s time to catch up. The Guardian, Feb 6. http://www.theguardian.com/small-business-network/2015/feb/06/how-mobile-ecommerce-changing-fashion-industry

  • Che YK (1996) Customer return policies for experience goods. J Ind Econ 44(1):17–24

    Article  Google Scholar 

  • Chen J, Bell PC (2009) The impact of customer returns on pricing and order decisions. Eur J Oper Res 195(1):280–295

    Article  Google Scholar 

  • Chen J, Bell PC (2011) Coordinating a decentralized supply chain with customer returns and price-dependent stochastic demand using a buyback policy. Eur J Oper Res 212(2):293–300

    Article  Google Scholar 

  • Chen J, Bell PC (2012) Implementing market segmentation using full-refund and no-refund customer returns policies in a dual-channel supply chain structure. Int J Prod Econ 136(1):56–66

    Article  Google Scholar 

  • Chen J, Grewal R (2013) Competing in a supply chain via full-refund and no-refund customer returns policies. Int J Prod Econ 146(1):246–258

    Article  Google Scholar 

  • Chen X, Zhou Q (2014) Loss-averse retailer’s optimal ordering policies for perishable products with customer returns. Math Probl Eng Article ID 831796, 5 p

    Google Scholar 

  • Chen K, Kaya M, Özer Ö (2008) Dual sales channel management with service competition. Manuf Serv Oper Manage 10(4):654–675

    Google Scholar 

  • Choi TM (2013) Optimal return service charging policy for a fashion mass customization program. Serv Sci 5(1):55–68

    Google Scholar 

  • Choi TM, Liu N, Ren S, Hui CL (2013) No refund or full refund: when should a fashion brand offer full refund consumer return service for mass customization products? Math Probl Eng 23:1–15

    Google Scholar 

  • Christopher M, Lowson R, Peck H (2004) Creating agile supply chain in the fashion industry. Int J Retail Distrib Manage 32(8):367–376

    Article  Google Scholar 

  • Chu W, Gerstner E, Hess J (1998) Managing dissatisfaction: how to decrease customer opportunism by partial refunds. J Serv Res 1(2):140–155

    Google Scholar 

  • Cohen MA, Cull A, Lee HL, Willen D (2000) Saturn’s supply-chain innovation: high value in after-sales service. Sloan Scl Manage 41(4):93–102

    Google Scholar 

  • Creutz M, Larsson F (2012) Reverse logistics case study comparison between an electronic and a fashion organization. Master Thesis, Jonkoping University

    Google Scholar 

  • Davis S, Gerstner E, Hagerty M (1995) Money back guarantees in retailing: matching products to consumer tastes. J Retail 71(1):7–22

    Article  Google Scholar 

  • Davis S, Hagerty M, Gerstner E (1998) Return policies and the optimal level of ‘hassle’. J Econ Bus 50(5):445–460

    Article  Google Scholar 

  • Desmet P (2014) How retailer money-back guarantees influence consumer preferences for retailer versus national brands. J Bus Res 67(9):1971–1978

    Article  Google Scholar 

  • Ferguson M, Guide M Jr, Souza GC (2006) Supply chain coordination for false failure returns. Manuf Serv Oper Manage 8(4):376–393

    Google Scholar 

  • Fernie J, Sparks L, McKinnon CA (2010) Retail logistics in the UK: past, present and future. Int J Retail Distrib Manage 38(11/12):894–914

    Article  Google Scholar 

  • Foscht T, Ernstreiter K, Maloles C III, Sinha I, Swoboda B (2013) Retaining or returning? Some insights for better understanding of return behaviour. Int J Retail Distrib Manage 41(2):113–134

    Article  Google Scholar 

  • Gecker R, Vigoroso MW (2006) Revisiting reverse logistics in the customer centric service chain. Benchmark Report. Aberdeen Group, Inc.

    Google Scholar 

  • Grant BD, Lambert MD, Stock RJ, Ellram ML (2006) Fundamentals of logistics management, European edn. McGraw-Hill Education, New York

    Google Scholar 

  • Grewal D, Munger JL, Iyer GR, Levy M (2003) The influence of internet-retailing factors on price expectations. Psychol Mark 20(6):477–493

    Article  Google Scholar 

  • Ha Y, Stoel L (2004) Internet apparel shopping behaviors: the influence of general innovativeness. Int J Retail Distrib Manage 32(8):377–385

    Article  Google Scholar 

  • Harris LC (2008) Fraudulent return proclivity: an empirical analysis. J Retail 84(4):461–476

    Article  Google Scholar 

  • Harris LC (2010) Fraudulent consumer returns: exploiting retailers’ return policies. Eur J Mark 44(6):730–747

    Article  Google Scholar 

  • Heiman A, McWilliams B, Zilberman D (2001) Demonstrations and money-back guarantees: market mechanisms to reduce uncertainty. J Bus Res 54(1):71–84

    Article  Google Scholar 

  • Hess J, Mayhew G (1997) Modeling merchandise returns in direct marketing. J Direct Mark 11(2):20–35

    Article  Google Scholar 

  • Hess J, Chu W, Gerstner E (1996) Controlling product returns in direct marketing. Mark Lett 7(4):307–317

    Article  Google Scholar 

  • Hewitt M (2008) Retailers: time to shout about your returns policy. Logistics Transp Focus 10(8):58–61

    Google Scholar 

  • Hjort K, Hellstrom D (2014) Experiment of consumer behaviour in fashion E-commerce—experience and insights. Lund University

    Google Scholar 

  • Hjort K, Lantz B, Ericsson D, Gattorna J (2013) Customer segmentation based on buying and returning behavior. Int J Phys Distrib Logistics Manage 43(10):852–865

    Article  Google Scholar 

  • Huang X, Gu J, Ching W, Siu T (2014) Impact of secondary market on consumer return policies and supply chain coordination. Omega 45(3):57–70

    Article  Google Scholar 

  • Kang M, Johnson K (2008) Identifying characteristics of consumers who frequently return apparel. J Fashion Mark Manage 13(1):37–48

    Article  Google Scholar 

  • Kim S (2013) Online retailers tackle high rate of customer returns. ABC News, Dec 24, http://abcnews.go.com/Business/online-shopping-transactions-returned/story?id=21312312

  • Kim J, Wansink B (2012) How retailers’ recommendation and return policies alter product evaluations. J Retail 88(4):528–541

    Article  Google Scholar 

  • King T (2004) Deshopping: retail perspective on the mismanagement and prevention of ‘deshopping’. Eur Retail Dig 44:61

    Google Scholar 

  • King T, Dennis C, McHendry J (2007) The management of reshipping and its effects on service: a mass market case study. Int J Retail Distrib Manage 35(9):720–733

    Article  Google Scholar 

  • King T, Dennis C, Wright LT (2008) Myopia, customer returns and the theory of planned behavior. J Mark Manage 24(1–2):185–203

    Article  Google Scholar 

  • Langley CJ, Coyle JJ, Gibson JB, Novack AR, Bardi JE (2008) Managing supply chains—a logistics approach, 8th edn. South Western College, Kentucky

    Google Scholar 

  • Lee M (2009) An exploratory study of immoral consumer behavior: apparel retail salespeople’s perspectives. Fashion Bus 13(3):62–76

    Google Scholar 

  • Lei J, de Ruyter K, Wetzels M (2008) Consumer responses to vertical service line extensions. J Retail 84(3):268–280

    Article  Google Scholar 

  • Lele MM (1997) After-sales service: necessary evil or strategic opportunity? Managing Serv Qual 7(3):141–145

    Article  Google Scholar 

  • Li Y, Lei X, Li D (2013) Examining relationships between the return policy, product quality, and pricing strategy in on line direct selling. Int J Prod Econ 144(2):451–460

    Article  Google Scholar 

  • Liu J, Mantin B, Wang H (2014) Supply chain coordination with customer returns and refund-dependent demand. Int J Prod Econ 148(2):81–89

    Article  Google Scholar 

  • Martinez R (2009) Best practices in return management. http://multichannelmerchant.com/opsandfulfillment/best-practices-in‐returns‐management‐01122009/

  • Masson R, Iosif L, MacKerron G, Fernie J (2007) Managing complexity in agile global fashion industry supply chains. Int J Logistics Manage 18(2):238–254

    Article  Google Scholar 

  • McCollough MA, Gremler DD (2004) A conceptual model and empirical examination of the effect of service guarantees on post-purchase consumption evaluations. Managing Serv Qual 14(1):58–74

    Article  Google Scholar 

  • McWilliams B (2012) Money-back guarantees: helping the low-quality retailer. Manage Sci 58(8):1521–1524

    Article  Google Scholar 

  • Melendez K (2013) How to reduce the cost of consumer returns posted. http://info.mkmdistribution.com/blog/bid/362624/How-to-Reduce-the-Cost-of-Customer-Returns

  • Millar M (2013) Return to sender: why the christmas boom can be a retail headache. BBC News, http://www.bbc.com/news/business-21148508

  • Min H, Ko HJ (2008) The dynamic design of a reverse logistics network from the perspective of third-party logistics service providers. Int J Prod Econ 113(1):176–192

    Article  Google Scholar 

  • Moorthy S, Srinivasan K (1995) Signaling quality with a money-back guarantee: the role of transaction costs. Mark Sci 14(4):442–466

    Article  Google Scholar 

  • Mostard J, Teunter R (2006) The newsboy problem with resalable returns: a single period model and case study. Eur J Oper Res 169(1):81–96

    Article  Google Scholar 

  • Murphy J, Benrs S (2015) Retailers found unprepared to meet “I want it now” consumer demand—New HRC advisory study uncovers key challenges within retail supply chain. Business wire—HRC advisory. Retrieved from: http://www.businesswire.com/news/home/20150915006463/en/Retailers-Unprepared-Meet-%E2%80%9CI-Now%E2%80%9D-Consumer-Demand#.VgP41pMsw-o

  • National Retail Federation Report (2014) Customer returns in the retail industry

    Google Scholar 

  • Nike Returns (2015) Retrieved Nov 13, 2015, from http://help-en-us.nike.com/app/answers/detail/article/returns-policy/a_id/29785

  • Nizovtsev D, Novshek W (2004) Money-back guarantees and market experimentation. Int J Ind Organ 22(7):983–996

    Article  Google Scholar 

  • Norek CD (2002) Returns management. Making order out of chaos. Supply Chain Manage Rev 6(3):34–42

    Google Scholar 

  • Ofek E, Katona Z, Sarvary M (2011) ‘Bricks & clicks’: the impact of product returns on the strategies of multi-channel retailers. Mark Sci 30(1):42–60

    Article  Google Scholar 

  • Pei Z, Paswan A, Yan R (2014) E-tailer’s return policy, consumer’s perception of return policy fairness and purchase intention. J Retail Consum Serv 21(3):249–257

    Article  Google Scholar 

  • Petersen JA, Kumar V (2010) Can product returns make you money? MIT Sloan Manage Rev 51:85–89

    Google Scholar 

  • Piron F, Young M (2000) Retail borrowing: insights and implications on returning used merchandise. Int J Retail Distrib Manage 28(1):27–36

    Article  Google Scholar 

  • Piron F, Young M (2001) Retail borrowing: Definition and retailing implications. J Retail Consum Serv 8(3):121–125

    Article  Google Scholar 

  • Pralle A, Stalk G Jr (2006) Returns: the ugly ducklings of retail. The Boston consulting group’s report

    Google Scholar 

  • Ramanathan R (2011) An empirical analysis on the influence of risk on relation- ships between handling of product returns and customer loyalty in E-commerce. Int J Prod Econ 130(2):255–261

    Article  Google Scholar 

  • Ratcliff C (2014) How fashion ecommerce retailers can reduce online returns. https://econsultancy.com/blog/65026-how-fashion-ecommerce-retailers-can-reduce-online-returns/

  • Richardson J (1996) Vertical integration and rapid response in fashion apparel. Organ Sci 7(4):400–412

    Article  Google Scholar 

  • Rose A (1996) U.S. Patent No. 5, 930, 769. Washington, DC: U.S. Patent and Trademark Office. System and method for fashion shopping

    Google Scholar 

  • Rosenbaum M, Kuntze R (2005) Looking good at the retailers’ expense: investigating unethical retail disposition behaviour among compulsive shoppers. J Retail Consum Serv 12(3):217–225

    Article  Google Scholar 

  • Ruiz-Benitez R, Muriel A (2014) Consumer returns in a decentralized supply chain. Int J Prod Econ 147(1):573–592

    Article  Google Scholar 

  • Schmidt S, Kernan J (1985) The many meanings (and implications) of satisfaction guaranteed. J Retail 61(4):89–108

    Google Scholar 

  • Schmidt R, Sturrock F (1999) Deshopping. The art of illicit consumption. Int J Retail Distrib Manage 27(8):209–301

    Article  Google Scholar 

  • Shieh S (1996) Price and money-back guarantees as signals of product quality. J Econ Manage Strategy 5(3):361–377

    Article  Google Scholar 

  • Shulman D, Coughlan AT, Savaskan RC (2009) Optimal restocking fees and information provision in an integrated demand-supply model of product returns. Manuf Serv Oper Manage 11(4):577–594

    Google Scholar 

  • Shulman D, Coughlan AT, Savaskan RC (2010) Optimal reverse channel structure for consumer product returns. Mark Sci 29(6):1071–1085

    Article  Google Scholar 

  • Shulman D, Coughlan AT, Savaskan RC (2011) Managing consumer returns in a competitive environment. Manage Sci 57(2):347–362

    Article  Google Scholar 

  • Stalk G (2006) Customer returns top $10 billion in 2005: most Canadian retailers fail to capitalize on this key customer relationship. Canada NewsWire, Ottawa 1

    Google Scholar 

  • Stuart J, Bonawi-tan W, Loehr S (2005) Reducing costs through improved returns processing. Int J Phys Distrib Logistics Manage 35(7):468–480

    Article  Google Scholar 

  • Su X (2009) Consumer returns policies and supply chain performance. Manuf Serv Oper Manage 11(4):595–612

    Google Scholar 

  • Swinney R (2011) Selling to strategic consumers when product value is uncertain: The value of matching supply and demand. Manage Sci 57(10):1737–1751

    Article  Google Scholar 

  • The Economist (2013) Return to Santa—E-commerce firms have a hard core of costly, impossible-to-please customers. Retrieved Mar 1, 2014, fromhttp://www.economist.com/news/business/21591874-e-commerce-firms-have-hard-core-costly-impossible-please-customers-return-santa

  • Thompson E (2013) Unique characteristics of the fashion industry. http://inbloomautumnwinter2013.blogspot.ca/2012/05/unique-characteristics-of-fashion.html

  • Toktay LB (2003) Forecasting product returns, in business aspects of closed-loop supply chains. In: Guide VD Jr, Van Wassenhove LN (eds) Carnegie Mellon University Press. Pittsburgh, Pennsylvania

    Google Scholar 

  • VandeVate J, Bedir G (2005) Many happy returns! Frontline solutions magazine, http://www.chromatographyonline.com/lcgc/Columns/Many-Happy Returns/ArticleStandard/Article/detail/153267

  • Vlachos D, Dekker R (2003) Return handling options and order quantities for single period products. Eur J Oper Res 151(1):38–52

    Article  Google Scholar 

  • Walsh G, Möhring M, Koot C (2014) Preventive product returns management systems: a review and model. In: 22nd European conference on information systems, Tel Aviv

    Google Scholar 

  • Wertenbroch K, Skiera B (2002) Measuring consumers’ willingness to pay at the point of purchase. J Mark Res 39(2):228–241

    Article  Google Scholar 

  • Wood SL (2001) Remote Purchase environments: the influence of return policy leniency on two-stage decision processes. J Mark Res 38(2):157–169

    Article  Google Scholar 

  • Xu L, Li Y, Govindan K, Xu X (2015) Consumer returns policies with endogenous deadline and supply chain coordination. Eur J Oper Res 242(1):88–99

    Article  Google Scholar 

  • Yan R (2009) Product categories, returns policy and pricing strategy for e-marketers. J Prod Brand Manage 18(6):452–460

    Article  Google Scholar 

  • Yoo SH, Kim D, Park MS (2015) Pricing and return policy under various supply contracts in a closed-loop supply chain. Int J Prod Res 53(1):106–206

    Article  Google Scholar 

  • Zabriskie NB (1973) Fraud by consumers. J Retail 48(4):22–27

    Google Scholar 

  • Zappos.com customers enjoy free shipping, free returns, and 24/7 customer service! | Zappos.com (2015) Retrieved Nov 13, 2015, from http://www.zappos.com/shipping-and-returns

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Mack A Diggins .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer Science+Business Media Singapore

About this chapter

Cite this chapter

Diggins, M.A., Chen, C., Chen, J. (2016). A Review: Customer Returns in Fashion Retailing. In: Choi, TM. (eds) Analytical Modeling Research in Fashion Business. Springer Series in Fashion Business. Springer, Singapore. https://doi.org/10.1007/978-981-10-1014-9_3

Download citation

Publish with us

Policies and ethics