Reducing ecommerce returns with return credits

Massive ecommerce returns incur considerable costs for e-retailers, erode their competitiveness and make their product returns management complex and difficult. Reducing returns can help e-retailers mitigate these negative consequences. This article focuses on ecommerce returns due to satisfaction-related reasons, the most common reasons for ecommerce returns, and studied the use of return credits (a maximum free returns amount) to reduce these kinds of returns. This novel approach is different from full or partial return policy documented in existing literature. This article also studied the side effects of using return credits. A one-factor (credit amount: high vs. low) between-subject scenario experiment was conducted. ANOVA was used to test hypotheses. The results revealed that using return credits can significantly deter returns, while the high and low credit amount have a similar effect on deterring returns. Moreover, the high credit amount leads to weaker side effects than the low amount. These findings can help e-retailers decide whether to introduce return credits to manage returns, and help them design their return credits.