Shopping Fast and Returning Plenty: How Returns Policies Affect Online Product Choices

Abstract

Free-return policies are a critical aspect of online retailing, since they encourage consumers to purchase even when product fit (e.g., regarding size and taste) is not certain. Scholars usually explain the appeal of such policies in terms of increasing consumers’ net utility. In contrast, we argue that free-return policies actually discourage deliberate thinking by making the reversal of shopping decisions (i.e., product returns) less consequential. This paper takes the dual-process theory of thinking and knowing as a starting point and examines the effect of free returns on purchase decisions. We posit that free-return policies reduce shoppers’ motivation to deliberate; thus consumers are led to economize on analytical information processing and to rely more on another driver of preferences: affect. A series of four controlled experiments supports our related hypotheses and yields several implications for product choice. As compared with costly returns policies, a policy of free returns results in consumers selecting more quickly, recalling less information, shifting their preferences to affect-laden products, and ordering more of the same product. These findings offer insight — on the current debate over the usefulness of providing prepurchase information — that retailers can leverage to improve supplied information and thereby minimize the volume of product returns.

Keywords: Returns Policy, Dual-Process Theory, Product Choice, Product Returns