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By Cynthia Corzo
An FIU Business study finds that electronic word of mouth delivered by customer reviews, critical for online retail startups, is positively impacted by a more lenient merchandise return policy (MRP).
Received by buyers as a reward, this leniency drives them to leave positive, detailed reviews about the products and their shopping experience, the study found.
"Standing out among other products has become increasingly difficult," said Sebastian Garcia-Dastugue, assistant professor of marketing and logistics at FIU Business and one of the researchers. "One of the key factors that helps brands do this, at the point of sale online, are the reviews from clients."
The research, published in the January 2024 issue of the Journal of Business Logistics, analyzed the relationship between an item's MRP at the point of sale in terms of days allowed for returning a purchased item and the review that sale elicits from the buyer.
"Standing out among other products has become increasingly difficult. One of the key factors that helps brands do this, at the point of sale online, are the reviews from clients."
– Sebastian Garcia-Dastugue
"Returns are normally part of the transaction, and this is even more important in an online transaction because the buyer has no contact with the actual product at the time of purchase," said Garcia-Dastugue. "The principal mechanism available to eliminate any risk is the return policy."
Researchers tracked toy sales at a small online retailer between January 1, 2018 and December 31, 2018. The company sells its products on various platforms – including Amazon, Etsy and eBay – plus its own independent website. A total of 3,949 usable sales were examined, of which 529 delivered a review.
Each transaction was examined to determine if the product was returned, the quality of the review – number of words and whether the tone of the message was positive or negative. Researchers also looked at the date of purchase, the MRP and the time between purchase and return.
Garcia-Dastugue explained that results indicated that a more lenient MRP was associated with an increased likelihood of buyers writing a review providing a more positive rating. It was also associated with reviews that were deeper and more detailed.
"If extending the MRP represents a cost and doesn't increase the propensity for reviews, you keep the shorter window," said Garcia-Dastugue. "If it's 30, 45 or 90 days, you can modify it as the market evolves."
Garcia-Dastugue conducted the research with Rahul Nilakantan of Georgia Southern University, Carl Marcus Wallenburg of WHU - Otto Beisheim School of Management, and Shashank Rao of Auburn University.
