Study finds retailers offering longer return policies get fewer returns

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This report makes intuitive sense to me – if you’re not up against an imminent deadline you’re more likely to defer making a decision, and then more likely to just keep the thing you’ve bought. The generous IKEA mattress returns policy (90 days) probably works in a similar way, with the added fact that returning a mattress is a giant hassle most people simply won’t bother to do.

From the Washington Post:

Overall, a lenient return policy did indeed correlate with more returns. But, crucially, it was even more strongly correlated with an increase in purchases. In other words, retailers are generally getting a clear sales benefit from giving customers the assurance of a return.

But of course, not all return policies are created equal, and that’s where the findings get interesting. The team examined several potential characteristics of a return policy: Time (such as whether you must return within 14 days or 90 days); money (whether or not you get a full reimbursement); effort (whether you must provide a receipt or other forms); scope (whether even sale merchandise is eligible for return); and exchange (whether you’re limited to getting store credit for your return).

One surprising finding: More leniency on time limits is associated with a reduction — not an increase — in returns.

This may seem counterintuitive, but researchers say it could have varying explanations. Ryan Freling, who conducted the research alongside Narayan Janakiraman and Holly Syrdal, said that this is perhaps a result of what’s known as “endowment effect.”

“That would say that the longer a customer has a product in their hands, the more attached they feel to it,” Freling said.

Plus, the long time frame creates less urgency around the decision over whether or not to take it back.

This entry was posted in Behavioural Design, eCommerce, Marketing, News, User Experience and tagged , , on by .
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