No product returns, no product exchange policy

Traditionally, the companies have always followed a ‘push strategy’ wherein the companies pushed their offerings to the target customers through excessive marketing. With a shift in power from the hands of marketers to that of customers, the strategy was no longer effective in generating revenues for the firms. The researchers and marketing experts came up with a solution in the form of ‘pull strategy’ advocating the involvement of customers in product decisions (Lamb et al., 2009). As a result, the firms started conducting customers’ surveys to understand their needs and develop a customized offering. But, the focus remained the same: selling the company’s offerings to the target customers through an effective marketing mix. A fact that companies often hesitate to accept is that no matter how good the offering is; there will always be some returns in current business environments (Malone, 2004). Even the companies that have accepted this fact; they have largely concentrated on discouraging product returns.

Why companies discourage product returns?

The psychology behind discouraging product returns is that product returns by the customers are often treated as product’s failure by the companies. And, this is human psychology to avoid failures. Traditionally, the most convenient and common way to avoid product returns from customers has been a policy of ‘no returns, no exchange.’ It is still a common sight even till date to find retailers who do not offer any kind of returns or exchange policy to their so-called valued customers. It is also easy to find retailers who offer an only partial refund of money in case of product returns. Such retailers often maintain troublesome return and exchanges policies so that customers can be discouraged to make product returns frequently. This is usually done by keeping return period too short, offering no support for getting the product back from the customer, maintaining a ‘no refund-only exchange’ policy, allowing returns of only unopened products, or by necessitating a lot of documentation in the returns process. No doubt they are free from the hassles involved in retrieving sold products back from the customers, refunding their money, restoring the returned product in their warehouse, and managing to resell of the product (Petersen and Kumar, 2012). The benefits of this policy are discussed; so let’s have a look at the negative aspect of the policy too.

Is it correct to discourage product returns?

By discouraging customers to return the product, the companies often discourage them to buy also. This happens especially in the case of online shopping where the buying is mostly based on ‘no touch, no feel’ phenomenon. The consumers buy a product only on the basis of product specifications mentioned by the online retailers. In case the product fails to meet their expectations, and if there is no return, no exchange policy; the customers feel cheated and the result is they spread negative word-of-mouth for the company. This not only restricts the development of new customer base but also discourages customer loyalty and repeat purchases. Moreover, these companies never get to know the actual feedback on their products and services from the end-users. A product may also be returned by the customer if he/she finds it difficult to use; but the same is never communicated to the company (Coyle et al., 2009). As such, a number of times products that could be sold easily by enhancing customer education are withdrawn by companies.

Present business environments, therefore, create a need for firms to understand that product returns are an essential part of sales. A change in the psychology of companies towards product returns is highly recommended.


Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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