Summary: CFR Early Insight #32

1. Although offering free returns in online retail leads to desirable changes in customer behavior (e.g., increased sales), these changes likely do not outweigh the associated costs of handling more returns (e.g., shipping and handling costs).

2. Retailers can benefit from allowing customers to return online orders in physical stores (e.g., increased traffic and cross-selling), however, to counter the negative effects on store execution, they need to establish processes to manage online returns efficiently.

3. Ongoing research suggests that the buy-now-pay-later (BNPL) payment function increases sales but also results in unsustainable shopping behavior (i.e., more returns). Factors are currently explored that can reduce the negative effects of BNPL on returns (e.g., role of delivery, category effects, usage restrictions).

2023-11-15