Exchange and refund of complementary products

Abstract

A common dilemma a consumer faces during product return pertains to the decision of exchanging the product or obtaining a refund. This issue becomes even more salient for durable goods, when the initial purchase involves complementary products from different categories. This research examines consumer’s trade-off decision between returning and keeping complementary products by exploring various retail actions (using umbrella branded products (UBP)) and customer characteristics. We also investigate the trade-off between product exchange and refund when consumer returns a product. We find interesting extensions to past research wherein UBP are returned less and result in greater exchange than refund. Furthermore, an interesting caveat is that higher degree of complementarity between UBP intensifies the impact of various factors on exchange as opposed to refund of products. Implications for retail managers and sales teams are explored.