Managing the Necessary Evil: Can Payment Methods Reduce Product Returns?

摘要

Product returns are widespread, costly, and prominent for many online retailers. But there is no simple tactic for online retailers to deal with product returns, as stricter return policies harm the customer-firm relationship and lenient policies lead to high return costs. This study proposes that payment methods offer an important driver of product returns, thereby offering a fresh perspective on effective product return management techniques. Payment method research establishes that the timing of payment (i.e., before or after consumption) invokes different perceptions of benefits and costs. Therefore, and in line with exchange theory, we argue that customers perceive a higher net value from keeping the product when they pay before the product is delivered (e.g., by direct debit), because they develop stronger feelings of psychological ownership and lower perceived effort associated with keeping the product. In contrast, keeping the product may seem more costly if the payment is incomplete when the order gets delivered (e.g., paying by invoice). Therefore, customers paying after delivery may reveal a higher return likelihood than customers who pay before the delivery.