The leniency of return policy and consumers’ repurchase intention in online retailing
| Date | 19 November 2019 |
| Pages | 21-39 |
| Published date | 19 November 2019 |
| DOI | https://doi.org/10.1108/IMDS-01-2019-0016 |
| Author | Yacan Wang,Jason Anderson,Seong-Jong Joo,Joseph R. Huscroft |
| Subject Matter | Information & knowledge management |
The leniency of return policy and
consumers’repurchase intention
in online retailing
Yacan Wang
Beijing Jiaotong University, Beijing, China
Jason Anderson and Seong-Jong Joo
Graduate School of Engineering and Management,
Air Force Institute of Technology, Wright-Patterson AFB, Dayton, Ohio,
USA, and
Joseph R. Huscroft
North Carolina Agricultural and Technical State University,
Greensboro, North Carolina, USA
Abstract
Purpose –The purpose of this paper is to investigate the relationship between the repurchase intention of a
customer and his/her perception of various aspects of an e-tailer’s product return process, such as leniency,
fairness and quality of the return process.
Design/methodology/approach –This research focuses on these aspects through the expectation
disconfirmation theoretical lens, looking at the relationship between expectations shaped by the product
return policy and the repurchase intention. This research collects data using a survey approach and analyzes
it using structural equation modeling.
Findings –It was found that perceived return policy leniency, perceived fairness of the return experience
and perceived quality of the return experience are important and supporting factors that influence a
customer’s intention to be a return customer to e-tailers. Perceived leniency was found to not only be the most
influential factor for return purchase intention but it also significantly impacted the perceived fairness and
the quality of the return process. As a result, perceived leniency of the return policy had a “halo”effect on the
other factors.
Practical implications –This suggests that the majority of an e-tailer’s effort should be expended
determining a return policy and experience that is widely perceived as lenient as this will overall improve
customer perception of the return process and increase repurchase intention.
Originality/value –This research extends research on lenient policy within the growing e-tailer sector by
examiningthe return experienceof the customer and subsequentrepurchaseintention based on multiplefactors.
Keywords Structural equation modelling, Online retailing, Return policy, Repurchase intention,
Expectation disconfirmation
Paper type Research paper
Introduction
E-commerce has been consistently growing and grew another 3.6 percent in the second
quarter of 2008 to 8.5 percent in the first quarter of 2017, as a percentage of total retail sales
in the USA. In 2017, US e-commerce sales were $453bn (CBRE, 2018). The picture is very
similar worldwide. China had $1.15 trillion in e-commerce retail sales in 2017, representing
15 percent of retail sales and is emerging as the top e-commerce country (Tong, 2018).
Worldwide, retail sales totaled $22.7 trillion with e-commerce sales accounting for
10.1 percent, or $2.29 trillion (Tong, 2018).
Industrial Management & Data
Systems
Vol. 120 No. 1, 2020
pp. 21-39
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-01-2019-0016
Received 9 January 2019
Revised 2 June 2019
16 September 2019
Accepted 18 September 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
This study was supported by the joint project of the National Natural Science Foundation of China and
the Joint Programming Initiative Urban Europe (NSFC –JPI UE) (“U-PASS,”71961137005), the Natural
Science Foundation of Beijing (9172014) and the Fundamental Research Funds for the Central
Universities (2018JBWB003).
21
The leniency of
return policy
Although the e-commerce sector is rapidly growing, sales within the e-commerce
marketplace are associated with a higher product return rate (Mollenkopf et al.,2007)
presenting a uniquechallenge for e-commerce sites.In the USA, about a third of all purchases
are returned (Banjo, 2013). In China, returns are estimated to cost about $159.5m (Lung and
Chen, 2016). Managingthese product returns effectivelycan provide a competitive advantage
in this fast-growing and competitive landscape of e-commerce marketplaces (Lantz and Hjort,
2013; Griffis et al., 2012; Janakiraman et al., 2016; Mollen kopf et al., 2007).
With the growth in e-commerce, retailers feel the pressure to offer varying product return
policies to retain customer loyalty in this competitive landscape (Gefen, 2002a; Schafer et al.,
2011; Cox and Dale, 2001). Some offer full-product-returns (Li et al., 2013; Pei et al., 2014),
which allow refunds or exchanges at full amount without additional charges such as
restocking fees. Other e-tailers offer return products to a physical store, avoiding the burden
of the customer packaging and shipping the product back to the company (Bernon et al.,
2016; Harrysson and Landin, 2015). A goal of lenient product return policies is to incentivize
customers to purchase products by reducing the risk associated with the purchase
(Mollenkopf et al., 2007; Janakiraman et al., 2016).
Another distinction in e-commerce shopping is that customers experience longer wait
times during the product return process (Hübner et al., 2016). Given the inherent weakness of
the online return experience, an e-tailer can differentiate itself from the competition through
the product return policy and experience (Griffis et al., 2012; Mollenkopf et al., 2007). One
course of differentiation an e-tailer can use is the leniency of their return policy; thereby,
enhancing the customer return experience. Thus, this field of research has great
implications for both practitioners and academics and fills a critical gap in the e-commerce
return literature ( Janakiraman et al., 2016; Rao et al., 2018).
Research on the return process is critical for e-tailer success, as return policies and
processes are a major source of competitive advantage (Rao et al., 2018; Janakiraman et al.,
2016). Promotion and educating the customer on the return policy and the return service
level can positively impact a customer’s decision to purchase a product from an e-tailer
(Mollenkopf et al., 2007; Bonifield et al., 2010). Repurchase intention is critical as customers
make future purchases that are often larger in value than the initial purchase –if the initial
purchase experience is a positive experience (Griffis et al., 2012). However, little is known
about the effect of a customer’s return experience on their decision to be a repeat customer.
This leads to the main questions of this research:
RQ1. Does a lenient return policy associated with a positive experience lead to increased
customer repurchase intention?
RQ2. Does a lesslenient return policy but a superior return experience lead to an
increased customer repurchase intention?
Customers acquire expectations from the initial standards of products or services and
develop perceived disconfirmation of the standards by experiencing the performance of the
products or services (Oliver, 1980; Oliver and Burke, 1999). If customers do not have
expectations for the return policy or return process of an online retailer are misaligned or
inaccurate, the customer’s perceived risk increases and greater information asymmetry
exists between the customer and the e-tailer (Kirmani and Rao, 2000). For an e-tailer to
reduce this expected customer risk and compete in the marketplace against other e-tailers
and brick and mortar stores, the e-tailer must provide clear and accurate expectations on its
customer-friendly return policy to the potential customers (Bonifield et al., 2010; Zhang et al.,
2017). Therefore, once customers experience the return process for the first time, they know
whether the promoted expectation, they were informed on, and the actual return experience
is in alignment-potentially creating dissonance or harmony for the customer (Bonifield et al.,
2010). This study is unique because it starts at the point where the customers have
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IMDS
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