Online purchase return policy leniency and purchase decision: Mediating role of consumer trust

Abstract

Recasting prior work on return-policy and purchase intentions literature, through the lens of signaling theory and relational signaling theory, we posit that returns policy, as a market signaling mechanism, is a costly investment that online retailers make to not only support current transaction but also to signal commitment towards customer service. What outcome would such costly signal result into? Based on relational signaling theory, it promotes trust, that in turn, could enhance purchase intentions. With empirical data from 730 online consumers of fast-moving consumer goods in Sweden, the study finds that, after controlling for shoppers’ age, education, income, gender, and frequency of online purchases, perceived consumer trust fully mediates the effect of perceived return policy leniency on purchase intention. Building on past research, we apply a different theoretical lens that connects costly signaling that drives relational signaling to foster customer trust to improve purchase intentions.