Using instant refunds to improve online return experiences

Abstract

In the online return context, offering the consumer a satisfactory return experience is critical to an online seller's success. However, little is known about how online sellers can improve consumers' online return experience. This research examines whether an instant refund service can improve the online return experience. To obtain a comprehensive view of the outcomes of using an instant refund service, this paper also examines how the use of an instant refund affects several pivotal consumer responses. Study 1 analyzed the effects of an instant refund service on consumer responses in a post-purchase pre-return scenario, and Study 2 analyzed the effects of instant refunds on a set of key variables in a post-purchase post-return scenario, including satisfaction with the online return experience. For each study, the hypotheses of the effects of an instant refund on consumer responses were discussed, and a one-factor (instant refund service, yes vs. no) between-subject scenario experiment (with an additional related experiment in study 1) was conducted, using online panel data from Wjx.cn. One-way ANOVA was used to test the hypotheses. It is concluded that an instant refund service increases consumer satisfaction with the experience and improves other consumer responses. In terms of potential side-effects, instant refunds are not significantly associated with stronger product return intentions. These findings can help online sellers decide whether to evolve their conventional refund mode to a new instant refund mode.