Abstract
Mail-ordering, particularly on the internet, has continually grown in importance over the last few years. This trend is expected to continue with no apparent end in sight. Liberal return policies have significantly contributed to this development by strengthening trust in both the individual retailers and the sales channel in general, but they do come at a price. This article is the first to systematically analyze the relation between the rate of returns and the associated costs. A circular model for the sales and returns process reveals a disproportionate relation between the two, which is further amplified once depreciation is considered. The model may serve decision-makers as an easy-to-use tool to systematically evaluate preventive returns management measures such as avoidance and gatekeeping.
Highlights
Mail-ordering has been growing rapidly over the last decade [1]
This paper introduced a circular model for the sales and returns process in a mail-order context
Geometric series have been used to describe the relation between the rate of returns and related costs
Summary
Mail-ordering has been growing rapidly over the last decade [1]. For the most part, this development can be attributed to the increasing acceptance of online shopping. Additional expenses occur if the merchandise is received in a deteriorated condition In these cases, retailers must bear the costs of new packaging, reconditioning, value depreciation, and waste disposal. Indirect costs represent potential damages to customer relations and are difficult to quantify. These costs are closely related to but should not be confused with the consumer’s return effort, which is occasionally referred to as ‘‘hassle costs’’ [e.g., 5, 6]. Transaction costs can involve hassles such as compromising one’s free time and psychological well-being. They can take the form of restocking fees or excluding shipping costs from reimbursement [5, 8]. The customer’s hassle costs reduce the retailer’s direct costs but raise the indirect return costs
Sign-in/Register to view highlights & summary 
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call