Information Search and Product Returns Across Mobile and Traditional Online Channels

Abstract

Product returns will soon cost firms a trillion dollars annually; e-commerce appears more at risk for these costs relative to offline channels. Retailers thus need strategic insights into which factors increase customers’ return propensity and when the short-term costs of returns might be offset by future customer purchases. This article reports two studies that use transaction data from two large apparel e-tailers. Study 1 demonstrates that due to the differences between mobile and traditional online channels, consumers form a larger consideration set when they shop through mobile channels, and this distinctive search practice spills over onto return rates. That is, return rates are lower in mobile channels, and the use of the mobile channel also alters the effect of discount promotions. The findings in Study 2 suggest that future purchases by consumers, after a return, are contingent on category characteristics. In categories in which customers can easily learn from their previous return experience, product returns positively increase future spending, but the opposite is true in categories in which it is difficult to learn.