On merchandise return policy, entrepreneurial internet retail, and customer reviews – Insights from an observational study

Abstract

The rapid growth of Internet retail platforms (e.g., Shopify and Wix) and marketplaces (e.g., Amazon, eBay, and Etsy) has given rise to a new wave of entrepreneurship. These are platform entrepreneurs—individuals who establish micro-retail businesses on third-party platforms. While there are now millions of such entrepreneurs worldwide, there has been limited scholarly investigation regarding the role of Logistics and Supply Chain Management (LSCM) policies that they can adapt to benefit their small businesses. Because the success of such businesses is intricately driven by the reviews they receive, we deem it essential to investigate how such reviews may be related to their LSCM policies. We conduct an observational field study at one such small platform seller. By investigating items sold under varying merchandise return policies (MRPs), we seek to isolate the relationship between MRP, and the likelihood, positivity, and depth of the reviews left by shoppers. Based on the concept of contractuality, rooted in Sociometer Theory, our results reveal that a more lenient MRP may serve as a perk that may positively impact the customer's review writing. However, the relationship is not monotonic. Instead, there is evidence that the effect of extended MRP leniency on reviews tapers off beyond a certain point.