Browse more, return less: Managing online returns through interactions with browsings and purchases

Abstract

The surge in online returns has become a significant concern for online retailers, leading to substantial financial losses. Despite its pivotal role in online shopping, limited research has examined returns as an integral component of the consumer shopping process. We fill the gap by investigating the interactions among consumers' browsings, purchases, and returns on a large online shopping platform. Utilizing a rich data set capturing consumers' activity streams, we introduce an augmented shopping process that incorporates returns into the consumer “purchase funnel” and reveal insightful findings. First, consumers who browse higher priced items or engage in extensive research are less inclined to make returns. Second, purchases of more expensive products or a higher quantity are more prone to returns, whereas purchases with higher discounts are less likely returned. Third, returning a purchase with a higher total amount is likely followed by another purchase, but a return of highly discounted items is not. Motivated by these findings, we illustrate two strategies retailers can use to mitigate online returns and enhance operational performance. Our study facilitates a better understanding of returns in online shopping and offers actionable implications for retailers seeking to effectively manage returns.