Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
I've always wondered...

Flexible return policies can lead to fewer returns

Andy Uhler Dec 22, 2016
Share Now on:
HTML EMBED:
COPY
Shoppers at Target in Los Angeles. 
MARK RALSTON/AFP/Getty Images

At a Target in downtown Los Angeles, Lauren Ireland exchanged a gift at the return counter just a few days before Christmas. She’s not the only one, either. Asked if a store’s return policy matters to her, she said, of course.

“I won’t buy it if I know I can’t return it,” she said. 

Target’s return policy is posted clearly behind the return cashier. The store will do “everything it can to ensure customer satisfaction” and “most unopened items returned within 90 days in new condition will receive a refund or exchange.” But that’s Target’s particular policy. Angela Hausmann, a marketing professor at George Washington University, said retailers calculate their return policies with one thing in mind.

“They don’t have to do anything when the product is not defective, based on manufacturing,” she said. “Businesses do this because of the good will that it generates with customers.”

Good will and loyalty. In a competitive marketplace, people can buy stocking stuffers anywhere. They can order them online and get them shipped to their homes. Regulators aren’t telling retailers they have to do anything to help the customer out.

“I think the biggest thing for consumers to understand is that there really are no legal protections for them,” Hausmann said. “And if they have a really stringent return policy, you’re just out of luck.”

Returns cost retailers lots of money. Joe Colangelo, president of Consumers’ Research, said it becomes a bigger issue when customers take advantage of a return policy.

“Fraudulent returns account for about four percent of all holiday returns,” he said. “Just holiday sales alone, there’s going to be $2.2 billion in fraudulent returns.”

Some people call it “renting a product.” Someone needs a drill for a day, but doesn’t need a drill all the time, so they go to a store with a liberal return policy, use the drill for a day and then take it back. Colangelo said there’s nothing a retailer can do to change consumer behavior.

“People’s behavior is very difficult to change,” he said. “There are a number of customers who are never going to take advantage of a return policy because they feel that it’s morally wrong. And then there are some people that, no matter how strict you make it, they’re going to find the loophole that allows them to get a little extra.”

But, believe it or not, a liberal return policy might lead to fewer returns. Stacy Wood, professor of marketing at North Carolina State University, did research into exactly that. She said it’s a psychological thing.

“Here’s what happens, here’s the mechanism: when consumers see a liberal return policy it’s a signal to them, a cue, that the retailer is standing behind their products,” she said. “What happens is that there’s this tricky little psychological bias that we all fall prey to, which is called confirmatory bias. And what happens is that we tend to view evidence in a way that confirms our prior expectations.”

For many customers, a liberal return policy makes them think they’re shopping at a good store. Maybe that’s why L.L. Bean is willing to take back those 15-year-old cross country skis, no questions asked.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.