December 11, 2025 • 38 mins
Ever wonder why a “standard” return policy can feel so unfair at the counter? We unpack the psychology and operations behind returns with Dr. Travis Tokar, Professor of Supply Chain Management at TCU, and explore how loss aversion, fairness, and frontline interactions shape customer reactions far more than a PDF policy ever will.
We walk through the five policy levers: money, exchange, time, scope, effort, and show which ones trigger loss perceptions that spark anger, and which ones customers accept when the rules are clearly justified. You’ll hear why framing a 15% fee as an “85% refund” doesn’t help, how justice theory explains real-world reactions, and why linking stricter terms to item-specific costs (like data wiping for electronics) earns legitimacy. We also compare mail-in versus store returns, highlighting where centralization saves money, when a fast shelf restock wins, and how to nudge shoppers to lower-cost channels with faster refunds, nearby drop-offs, or small incentives.
Beyond costs, we dig into what matters for loyalty: measuring more than return rates, using returnless returns strategically to boost goodwill, and training frontline teams to balance consistency with humane exceptions. Travis shares experiments, real policy patterns across retailers, and practical tests worth trying, like adaptive leniency for high-value customers and firm guardrails for serial returners. It’s a candid playbook for designing return policies that reduce friction, respect customers, and protect margins.
If this conversation gave you new ideas for your returns strategy, follow the show, share it with a teammate, and leave a quick review telling us which policy change you’ll test next.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:09):
I have with me today Dr.
Travis Tokar, who is professorof supply chain management at
Texas Christian University, alsoknown as TCU.
(00:32):
And also demand planning andother things.
Thanks for joining me today,Travis.
Absolutely.
Glad to be here.
So Travis, I know you've done alot of work on returns.
And I know you've returned a fewthings in your life, too.
(00:53):
In simple terms, what makes areturn policy feel harsh to a
shopper, even when it looks likeit's standard to a retailer?
SPEAKER_00 (01:10):
Yeah, so there's a number of papers that have been
uh published over the lastseveral years that uh start to
uh address this question.
And uh while there's still, Ithink, a little bit to uh be uh
uncovered, I I think what it'scoming down to is uh a couple of
key points.
(01:31):
Uh first, uh does the policy orelements of the policy feel like
a loss?
Uh one of the things that uh weknow from a lot of research in
uh economics and psychology isthat people hate losses.
Uh financial gains.
As opposed to gains, yes,relative to gains, uh losses.
SPEAKER_01 (01:53):
It took research to figure that out.
Yeah.
SPEAKER_00 (01:56):
Believe it or not.
Uh yeah.
So actually, what's beeninteresting is uh the
researchers have put somespecifics on these, uh uh what
we all know to be true.
And so uh uh a loss has roughlydouble the impact of an
equivalent gain.
So, you know, if you found$20 inyour pocket versus you got a$20
(02:17):
parking ticket, that$20 parkingticket makes you roughly twice
as unhappy as that uh findingthat$20 bill in your pocket made
you happy.
Uh so it's not uh uh perfectlydouble, but there's some uh uh
ballpark uh figures that we canmake some uh uh take some
actionable insight from.
(02:37):
But in terms of how this playsout in returns, uh a couple of
uh researchers have been lookingat different elements of
policies um in isolation.
Um in, well, I shouldn't say inisolation because they're always
together in a policy document,but they've really focused on
each different element uh byitself.
(02:58):
And so there's the monetaryelement.
You do you get a full refund, oris there a uh a fee taken out
when you get your return?
Um the exchange element, do youget cash back, or uh, you know,
is it the same uh form ofpayments that you get uh you
made, you get your return in, oruh is it a store credit return
(03:18):
only?
Uh there's time, you know, howmuch time do you have to make
the return?
Uh the scope.
Uh are all products eligible forreturn, or do they limit it to
full price purchases only, nosales, uh no clearance items?
And then the final one iseffort.
Uh this is going to includethings like uh a requirement
(03:40):
that you have the originalpackaging, the original tags,
the box being opened.
Uh you can only make the returncertain locations.
Uh you have to have itpre-authorized, you have to have
uh a driver's license to bescanned.
There's a whole list of thingsthat kind of fall under effort.
Now I know that's kind oflong-winded.
So to get to your question,Matt, uh, one of the things that
(04:01):
makes a policy feel harsh iswhen uh any of those elements
are structured so that it's it'sa direct loss to the consumer or
perceived as a loss.
So the monetary one for sure ishuge, uh, at least in past
research, showing that, yeah, ifyou take a fee out of someone's
return, it's gonna have a majorimpact on how they feel about
(04:23):
the situation.
Exchange falls under that aswell.
If I give you store credit backinstead of money, I'm giving you
something that's generally lessvaluable.
Uh and so it's seen as a loss,whereas the others aren't quite
so much or are aren't at allviewed in that same kind of
lens.
So loss is one piece.
(04:45):
Um, the other piece, uh Matt, interms of what uh makes a policy
feel harsh, is uh comes down tofairness perceptions.
So if a policy feels like it'sstructured arbitrarily uh or is
uh harsh towards the consumerwith no real justification for
(05:05):
it, uh that's not going to goover very well.
But if the policy is structuredso that consumers can see, oh,
okay, I understand why maybe uhthings are being restricted in
this way or why this is beingimposed upon me, uh as long as
it's justified somehow, uhpeople tend to be a lot more
(05:26):
accepting.
So loss and fairness, at leastin what we're seeing so far in
the literature and uh my ownresearch, uh that tends to uh
account for why some policiesare are are seen as harsh.
I see.
SPEAKER_01 (05:44):
Um and you know, if you're a shopper and you read
about a returns policy, you maythink, oh, this is fair or this
is harsh, or I like it or Idon't like it.
But is it is it perceiveddifferently when they're
(06:05):
actually making the returnversus reading about it?
SPEAKER_00 (06:10):
That's what I'm very interested in right now.
And uh so uh been looking atsome scenarios exploring that
very question because a lot ofthe research that's been done so
far has people evaluating uhpolicy statements on paper.
Uh not as many studies haveactually uh put people in a
(06:33):
return scenario and explored howthe various elements impact
their uh their their feelingsand their behavior.
And I think that's importantbecause um it seems to me, uh
just my own experience and alsojust looking at a lot of past
research, uh, you're gonna findsome major differences when
(06:55):
people are evaluating things uhjust on a piece of paper versus
when they're applied to them.
So um so yeah, I have a lot ofinterest in that question,
actually.
SPEAKER_01 (07:07):
Um and I know you've also looked at first person
versus third person.
Uh what changed when peoplepictured themselves in the
denial moment?
What what's the uh effect there?
SPEAKER_00 (07:23):
Yeah, so the the studies that I've been doing on
this so far uh are uh stillpreliminary.
We've just got some uh pilotstudies collected, excuse me,
pilot studies collected, and uhso we don't have uh enough data
to say uh anything with with uhcertainty, but initial evidence
(07:46):
is suggesting that, yeah, inmany cases there are some pretty
important differences.
Uh that this this all kind ofgets back to uh just the fact
that when uh thangs are madepersonal uh versus abstract or
versus applied to somebody else,uh it takes on a different life.
(08:07):
And I don't I don't know if youwant me to get into the weeds or
or not with this map, but itcomes down to justice theory and
the fact that there's multipleways in which people assess
fairness.
There's the outcome, you know,the distributive fairness of
something, and there's theprocedural justice as well,
which is uh the process by whichan outcome is reached.
(08:29):
And then there's interactionaljustice, which is uh has a lot
to do with uh does somebody feeluh treated fairly and respected
and informed during uh aprocess?
So when somebody's evaluatingsomething on paper, uh you're
you're you're doing so in a veryuh clinical state.
It's just you know, uh cut anddry, and it's really all about
(08:51):
the procedural fairness.
You look at this policy onpaper, and uh, you know, okay,
do the terms seem, generallyspeaking, fair?
Uh, but when it's applied to uhsomebody else, so it's making it
a little more tangible, right?
Someone uh is subject to this,or especially to you yourself,
uh it moves from just asituation where you're
(09:12):
evaluating the proceduralfairness or the procedural
justice of this policy and thenlooking also at the distribute,
the distributive element.
You know, what is the outcome?
It now matters a lot morebecause it's me.
And then also the interaction aswell, where uh you're gonna be
much more sensitive to uh wereyou treated fairly, uh, where
(09:34):
you've given clear informationuh about how all this was going
to play out.
And so there's a it's a muchricher uh scenario uh when it's
applied to individuals, and uhtherefore there's a lot more
opportunity for uh you knowpeople to be uh hacked off for
last lack of a better term, uh,when maybe yeah, the the outcome
(09:57):
isn't uh exactly what they'dwant, or they didn't feel they
were treated uh you know withrespect or dignity or uh weren't
informed.
So uh yeah, as soon as it movesfrom paper to uh personal, it it
becomes a much more umchallenging situation in a lot
of ways.
And I think that's important tostudy.
(10:18):
Uh the papers is one thing, butyou know, in practice, uh it's
people talking to people in a ina at a return counter.
This isn't just, you know, hey,read our policy on our website.
It's uh it what matters, atleast in my assessment, is how
people respond in reality.
And so I'm I'm really interestedin digging into that question.
SPEAKER_01 (10:39):
So a retailer can't just write a policy and then
have people read it and evaluateit.
Um because if they do that, theymight think it's gonna be
perceived more positively thanit actually will when it's
implemented.
SPEAKER_00 (10:54):
Exactly right, Matt.
What we are seeing so far isthat uh people do tend to
perceive just things on papermore positively than when
they're uh uh put into practice.
So it is a risk.
If you're uh um looking forconsumer feedback uh and you're
just looking at a uh a sheet ofpaper with a policy on it, uh
it's probably not going to uhget you the insight you're
(11:17):
looking for.
SPEAKER_01 (11:19):
So let's suppose let's talk about a return.
Return's occurring.
And let's say the return isdenied.
Like uh I know I've had thishappen.
I I bought um I bought an aircompressor and I took too long
(11:42):
to take it out of the box andyou know implement it, put it
put it together and uh but andand so I I took it out of the
box and I'm thinking this isn'twhat I want.
And so I tried to return it andI couldn't.
I was denied.
Now I went ahead and used it andit's in my garage.
(12:07):
But are there any measures orsignals that kind of predict
whether a denial will damageloyalty or word of mouth?
SPEAKER_00 (12:18):
Well, certainly um trying to assess the fairness,
the the perceived fairness ofpolicies uh in advance will help
retailers understand uh or or umpredict um how well these things
will be received.
Um but uh yeah, to some degree,um that that's uh part of what
(12:40):
I'm hoping to get into is somefuture studies.
Uh understanding uh when youwrite something on paper and
people view it and say, okay, Iknow this seems fair, but then
all of a sudden they come, youknow, wanting to make a return
and they're told, yeah, it'sbeen too long and you don't have
the packaging, uh, you know,whatever the reason, um okay,
(13:04):
how what are the nuances of theuh the thinking and emotion and
behavior that consumers aregoing to experience in that
situation?
And yeah, what can we do uh toprovide some um understanding of
how that's likely to play out?
SPEAKER_01 (13:19):
Where does framing fail?
And explain what framing is.
Um and policy design needs tochange instead about returns.
SPEAKER_00 (13:30):
Yeah.
So one approach to potentiallyum making policy stricter
without uh angering customersthat I was interested in
exploring were framing effects.
And framing effects refer to thefact that you can describe um a
(13:50):
choice or a decision or aproduct in negative terms or
positive terms, or as a gain oras a loss.
It's the same thing, but it'sjust described slightly
different.
So one classic example is uhground beef.
We all know you go to thegrocery store and it's the lean
content that is expressed on thepackage.
(14:11):
So 85%, 90%, 92%, it'sdescribing the lean content of
the ground beef.
You could just as easilydescribe that in terms of the
fat content, you know, 15%, 10%,8%.
Uh but what uh people have foundis that when you describe
something in terms of leanversus fat, or I should say the
ground beef is described interms of lean versus fat.
SPEAKER_01 (14:33):
Uh some people describe me in terms of fat.
SPEAKER_00 (14:39):
Yeah, I need to get out and uh yeah, uh do a little
more uh cardioactivity here.
I'm gonna be described in thesame way shortly, but uh but all
to say you you can easilydescribe something uh in
positive versus negative terms,and it's uh exactly the same
thing.
Uh maybe a more concrete exampleuh is uh medical procedures.
(15:01):
You can describe uh, you know,the uh let's say a surgical
intervention in terms of theprobability of survival versus
the mortality rate of theprocedure.
How you present that to apatient is going to likely have
a very strong impact on whetherthey choose to go through with
that or not.
Typically, things described inpositive terms are going to be
(15:23):
more accepted than things uhthat are described in negative
terms.
So, how does this apply toreturn policies?
Well, uh this this was just aninteresting uh little project
that I threw together a whileback, but I was curious because
past research had shown that umthe monetary element was by far
(15:46):
the most impactful.
If you charge somebody, forexample, a 15% return fee, um
they're gonna hate it.
It it elicits uh a lot ofnegative emotion and behavior.
Well, what if we described it asan 85% refund?
Same thing, but it's just kindof spinning the terms a little
(16:08):
bit.
And uh this this has been shownto be uh very effective in a lot
of other contexts.
However, in returns, uh theresults that we got showed uh,
yeah, it does nothing.
It really has no impact.
And as I dug into theliterature, it wasn't entirely
shocking.
Uh, there's some uh evidencethat shows when something is
(16:30):
just so impactful to a person,it really just has such a
profound impact on your uh youremotions, um, framing is just
not gonna help.
And so it looks like um reallythis that doesn't have a lot of
promise for helping in uh returnpolicies.
And um so that did point ustoward uh considering policy
(16:54):
design instead.
Because uh one of the thingsthat was interesting after we
did that framing study is uhwent back to the drawing board
and started looking at okay,what what are retailers actually
doing in practice today uh withtheir policies and how are they
structuring or how are they uhpresenting return fees?
(17:14):
And lo and behold, what wediscovered is contrary to a lot
of past research studies,retailers really aren't just
blanket-imposing return fees.
Uh it's it's just uh unheard ofto say basically, you know, hey,
there's a 15% return fee foranything you bring back.
It just doesn't work that way inpractice.
(17:36):
Um what we discovered was thatreturn fees, if they exist, are
limited to certain types ofproducts or certain situations.
And um, so for example, maybe umthere's a 15% return fee for uh,
let's say uh laptops or mobilephones, because these are going
to have to be inspected andrepackaged and wiped clean of
(17:59):
any personal information thatwas put on there.
And that takes time and energy.
So when that's put into thereturn policy, you know, an
explanation for these returnfees, uh, we thought, hmm, well,
this is interesting.
I wonder if uh, you know, thisis going to actually maybe make
them more palatable.
And it started looking across alot of other things as well.
(18:21):
Uh, that exchange element thathas been shown to be so
impactful as well, whether youget your cash back or store
credit, um, there's not a singlereturn policy that we could spot
where retailers were simplysaying you only get store credit
for returns.
That's what had been intested insome past research studies, but
(18:41):
that's really not how thingsplay out.
Store credit returns are givenwhen a shopper doesn't have
their receipt and transactionrecord, can't be found in the
store system, in which case themanager then can make a call.
You know, hey, maybe we'll takeit back, but you're you're gonna
get store credit, not not cashback or anything.
(19:02):
So um that kind of got us intouh the next leg of the study,
which was to start looking atfairness and and justification,
attribution as um uh as levers,or I guess I should say as tools
that retailers could use to makesome of those strict terms more
(19:24):
acceptable.
Um it's what a lot of them arealready doing, but I think
there's some other opportunity,and that's what we're exploring
next.
SPEAKER_01 (19:33):
So what do we know about the cost um structure
difference for mail in versusstore returns by product type?
SPEAKER_00 (19:47):
Yeah, I I'm not an insider, of course, and so um uh
I I'm just giving it my bestguess, so to speak.
But I've been reading a lot ofarticles on this and and uh um I
actually had an opportunity totalk.
To a former uh executive for uha major retailer who was uh uh
overseeing their reverselogistics uh just last week,
(20:09):
actually, had a chance to uhhear some comments and get some
feedback and some really greatinsight.
Uh, my understanding is that ummail in is going to be uh
obviously expensive in terms ofthe shipping, but that in some
cases um it's good to have thosereturns centralized.
It depends upon uh you knowwhat's the salvage value, um
(20:35):
what types of processing wouldhave to be done in order to make
this item resellable, um, if atall.
Um is a perishable things likethis.
Uh these types of questions willhelp determine whether it's most
efficient and effective to uhprocess this centrally
somewhere, or if it shouldinstead be managed at a store.
(20:55):
So if you can quickly put thisback on a shelf uh and sell it,
there's no problems, or if it'sperishable, uh there's a short
time window in which you couldresell, you probably want it
going back to a store.
Um store returns actually have alot of other knock-on benefits
as well.
If you get somebody in the storeto make a return, there's a
(21:16):
chance, probably a pretty goodone, they may buy something
while they're there.
Uh, or they may speak with astore associate who's gonna say,
oh, hey, uh you're returningthis for XYZ reason, but uh let
me show you maybe that issue canbe overcome and then the
customer keeps the product afterall.
So a lot of benefits to uhsending stuff in stores, but
(21:37):
stores all often aren't capableof repackaging something or
don't have space to process allthese returns.
And so um it comes down to uhthe individual stores and and or
products even uh to really get asense of which which channel is
best for the return.
SPEAKER_01 (21:58):
And let's suppose you know, suppose you're a
retailer, and I imagine thisvaries a lot by retailer too.
Um but suppose you are aretailer and you want to steer
customers towards the lower costpath.
What's a way to do that?
SPEAKER_00 (22:18):
Well, you can um certainly try to steer them in
that direction um by either ummaking that low-cost channel the
one on which the refund isprocessed the quickest.
Um, of course, you would have tomake sure that that aligns with
reality.
Uh and so you couldn't just youknow drag your feet on a refund
(22:42):
uh on a non-preferred channelunless there was kind of some
reason for it.
But trying to incentivize peopleor nudge is kind of a term you
hear often used.
Um nudging people toward themore desirable things by yeah,
making sure that uh they'll gettheir refund fastest through
that channel.
Or um you can present someinformation.
So if you do want people, let'ssay, to come to the store or
(23:04):
drop the product off physicallysomewhere, um, provide them some
uh location information when youare processing that return.
Like, hey, you know, there's afacility just five minutes away
from you.
Um you can offer discounts aswell.
Uh if you come in to make yourreturn as opposed to mailing it
(23:25):
in or you know, whatever thenon-preferred channel is, uh you
can offer uh a rebate of somekind or store credit or a gift
card or something.
I mean, all that costs money,but maybe it saves in the long
run versus the non-preferredrefund channel or return
channel, excuse me.
SPEAKER_01 (23:42):
Do you have any opinions about how companies
should track margin impact ofreturns?
SPEAKER_00 (23:51):
So this isn't going to be my specialty area.
Um, but uh you know, I I I dohave some opinions just broadly
speaking on maybe some metrics.
And um I think it's importantfor uh retailers to uh track
more than just return rates ormaybe even just the costs
(24:13):
associated with the return.
Certainly there's some salvagevalue that you can get out of
that that should be subtractedfrom that picture.
But um the impact on theconsumer in terms of um brand
perception, repurchaseintention, loyalty, word of
mouth, all these things tie toum their return experience.
(24:38):
Or I should say that there's alot of evidence that's showing
the return experience can have areally strong impact on all of
those things.
In fact, there was an articlethat was published recently in a
marketing journal, and I wasactually got a Wall Street
Journal write-up as well thatwas talking about the concept of
returnless returns.
So you may have experiencedthis, Matt, at some point
(25:00):
already, but um, if you make areturn on a product, there's re
there's there's instances nowwhere retailers are saying, you
know what, just keep it.
Yeah, I've had that happen.
I'm sorry, what was that?
I've had that happen, yes.
Yeah, yeah.
And so it's strange because youknow they're giving you this
(25:20):
product for free.
They're they're losing the thevalue uh of that product, uh,
plus the shipping uh that waspaid to get it to you, assuming
that uh the retailer coveredthat.
Um so so why are they doingthis?
Well, the it could be that thecost is just so high to uh ship
it back, process it, uh, youknow, inspect it, repackage it,
(25:41):
put it on a shelf somewhere, umthat they lose more money by
taking it back than they doletting you keep it.
And that's probably one mademotivator for it.
Uh, but in doing that math, thatthat that calculation, you know,
the cost versus um you know theum the lost margin there, um
(26:03):
it's important to also thinkabout the benefit that you get
from doing that.
The the paper I was referencinga second ago was showing that um
letting people keep things makesthem happy.
There's no surprise there, butum they looked at some specifics
in terms of uh you know the uhthe impacts on loyalty, um,
(26:24):
repurchase intention over time.
It got into even some of thenuance in terms of when they
tell you to keep it.
Um sometimes companies say, um,feel free to donate it, right?
And this um the this suggestionof something that's charitable
um or has um you know socialbenefits, I guess uh is a way to
(26:45):
phrase it, um, can enhance thateffect even further.
So um thinking of these uhscenarios as just a loss where
you know you you you've beenasked to uh you as a retailer,
you've been asked to take back aproduct, you can't you you've
really got to think about thebigger picture before you um
(27:05):
just say, okay, that this is atotal loss to us.
You you may actually be gettingsome benefit from it that maybe
could even exceed um the priceof the product or the value of
the product that you let theconsumer keep.
All right.
If you make a lifetime customerout of somebody because you've
just overwhelmed them with yourgood customer service, uh, you
(27:26):
know, that that's uh that that'ssomething that's uh uh worth
considering.
SPEAKER_01 (27:31):
You know, this is interesting too, um along those
lines, it's a little different,but it is similar in some ways,
and that is the air compressor Itold you about that I couldn't
return.
I thought, well, I can't returnit, I might as well use it,
right?
Now I'm glad I didn't return it.
(27:54):
I think that what I thought wasgonna be better probably wasn't.
This works quite well for whatI'm doing.
So that's kind of unexpectedtoo.
unknown (28:04):
Yeah.
SPEAKER_01 (28:05):
So the math on this is so complicated.
SPEAKER_00 (28:09):
It really is.
It comes down to uh individualproducts, individual shoppers.
Um it's it's it reminds me alot, Matt, of um the stock out
research from the 90s and 2000s,where um researchers and
retailers were trying to put anumber on, you know, what does
(28:29):
it cost to be out of stock of agiven product?
And the answer was uh basically,you know, the short answer
anyway, who knows?
Um it's because it's so highlyvariable what people do in
response to a stockout.
Uh you know, you may substitute,uh, if you're just, you know,
(28:49):
there happens to be a goodoption available.
Um, you may be in a bad moodthat day.
And so, you know, you leave yourentire basket in the store and
leave and storm out to gosomewhere else.
There's a thousand other thingsthat somebody can do.
And it just comes down tofactors that are very difficult
to uh predict or know on thefront end.
So I think a lot of those samechallenges apply to return
(29:14):
policy and return policyresearch.
What is a good policy?
What's what's the best way tostructure something?
How do we make policies so thatpeople do the things we prefer
them to do?
I think there are some thingsthat you can do to help with
some of that, but a lot of it isjust going to come down to the
individual and how they'refeeling that day, what the
(29:35):
circumstances they're operatingunder.
Um and that's very hard to topredict.
SPEAKER_01 (29:42):
So, Travis, um what if a what if you're trying to
return something and the policysays and you maybe as a a
shopper I I'm returningsomething.
I know the policy doesn't allowme to return this notes past the
(30:02):
date or whatever the reason is.
I can't do it.
What if the employee makes anexception?
Um and I know they're it doesn'tfit their policy, but for me
they're making the exception.
How does that affect loyalty andum and is it very costly to do
(30:28):
that?
SPEAKER_00 (30:28):
Yeah.
So I some of the existingresearch shows that situations
like that can have a real boostuh in terms of consumer
perception of the store, brandloyalty, all those types of
things, right?
If if um they strictly speaking,are uh you know, according to a
policy, you're supposed to bedenied, but yet the person
(30:51):
accepting the return makes anexception, uh, that that can
actually have some tremendousbenefit.
Now, there's some real riskthere and downside too, if these
um, you know, this items beingfraudulently returned or it's a
serial returner and it's itbecomes just uh you know um
abusive to the system in asense.
(31:12):
Um obviously you don't wantthat.
But um I am interested in thequestion of frontline employees
and um yeah, how how theirunderstanding or their
perceptions of the store'sreturn policy, the store they
work for, the return policy,does that shift or shape the way
(31:34):
that they behave and uh you knowwhether they kind of bend the
rules for some people or um youknow, or or maybe actually act
excessively harsh?
I know we're uh things aresupposed to be done by the book,
but uh I think we all know uh inpractice that uh you know
there's uh individuals uh willoften do things outside the
(31:57):
system or um kind of accordingto their own ways, if they don't
necessarily think that the maybethe policy is fair or good or
sensible.
So uh I have a lot of interestin that question.
Uh I haven't collected any dataon this yet, but that is uh
terms of uh uh direction I'dlike to go um in this space.
(32:18):
Uh that's on my radar.
SPEAKER_01 (32:20):
Travis, uh, I'm gonna ask you some questions
that are pretty relevant.
It could be like a lightninground, if you will.
Um but I know you've done a lotof research on returns and
you've thought about it a lot.
You've analyzed the policies ofmany publicly um available
(32:43):
policies from retailers, um, andyou've you've done research on
this quite a bit too, and youstill are.
So I want to ask you a fewquestions.
Um again, this is your opinionbased on everything you know.
Okay.
The first one is what's onepolicy change most retailers or
(33:05):
some retailers should test next.
SPEAKER_00 (33:09):
I would be very interested in um assuming the
retailer had the capability foruh keeping tabs on individual
shoppers, um customizing returnpolicies to shoppers to some
degree.
Um so for example, uh if you areum somebody that the retailer
(33:32):
knows to be um a frequentshopper, spends a lot of money,
or is is particularly purchasinghighly profitable items,
profitable for the retailer.
Uh maybe there's one set ofterms for people like this, and
then for uh shoppers that uh uhare are kind of come and go,
(33:53):
there's a different policy.
Or even for shoppers that areserial returners, uh, meaning
they're constantly bringingstuff back.
Uh the retailer is uh you knownot making money or maybe losing
money on these shoppers, there'syet a different type of policy
for those people.
Uh maybe a policy that gets themto shop somewhere else without
(34:14):
being angry, right?
Nudge them off to yourcompetitor instead of uh
continuing to put up with them.
Uh I'd be a little silly there,but uh I do think that the idea
of using the uh informationtechnologies that are available
today, uh maybe there's a way toactually um structure some
(34:35):
policy um that's unique to uhcertain types of shoppers.
It's risk there, of course, too,if people talk and you know,
wait a minute, you you got tomake a return, but I was told I
can't, or these, you know,whatever.
Uh that might not go over sowell.
So uh there's obviously risk andsome things that have to be
considered or worked around.
(34:56):
But uh I just think that there'sopportunity to um, you know,
maybe, or maybe there's onepolicy for everybody, but the
system allows uh the retailer toyeah, lighten it up on the spot
for certain people and uhtighten it up for others.
So um that'd be something I'd beinterested in.
SPEAKER_01 (35:15):
And what is um a metric that you think is
overrated in the return?
SPEAKER_00 (35:21):
Yeah, I'd say if if you're only looking at just
return rate, and that's that'sreally it, just you know, how
much stuff is coming back foryou know however many units we
sell, whatever.
Um I I think uh a retailer inthat situation would be missing
uh the bigger picture.
Um, it's important to thinkabout um what we talked about a
(35:44):
little bit ago, how yourleniency in return situations
can actually benefit you interms of customer goodwill, word
of mouth, loyalty, repurchase,all these types of things.
Uh, you know, your your returnsuh or your high return customers
in some cases can can still beyour best customers if they are
(36:06):
buying um high profit marginitems, they're shopping
frequently, they're bringingpeople into your store or
telling others how great it isto shop with you.
So uh if you're only looking atthe rate of return on a product
or for a customer, uh you mightbe missing a bigger picture and
making decisions that uhsuboptimize.
(36:27):
What's a common myth aboutreturns that you wish we'd um
well, maybe selfishly um as ashopper, um, you know, uh I'm
thinking about uh this um thethe push that I'm seeing to uh
try to to make returns harderand harder.
Uh you know, easy returns umaren't always necessarily a bad
(36:50):
thing, as we were just kind oftalking about.
Um they have a lot of benefitsuh as well.
So as retailers clamp down ontheir policies, um they they
they may be missing out on uh umsome some other benefits.
And so um, yeah, this notionthat uh um easy returns, uh bad
for profits, um it's a littlemore complex than that.
(37:14):
Um so certainly there's riskwith easy returns, not trying to
deny that at all, but um therethat's it's a deeper story that
needs to be uh investigated.
SPEAKER_01 (37:24):
Well, Travis, thank you so much for taking time to
visit with us about returns.
Umnichannel supply chainmanagement and retailing have
made returns a big issue and uha complicated one at that.
So thanks for sharing yourexpertise with us.
SPEAKER_00 (37:42):
Absolutely, any time.
All right.
I have with me today Dr.
Travis Tokar, who is professorof supply chain management at
Texas Christian University, alsoknown as TCU.
(00:32):
And also demand planning andother things.
Thanks for joining me today,Travis.
Absolutely.
Glad to be here.
So Travis, I know you've done alot of work on returns.
And I know you've returned a fewthings in your life, too.
(00:53):
In simple terms, what makes areturn policy feel harsh to a
shopper, even when it looks likeit's standard to a retailer?
SPEAKER_00 (01:10):
Yeah, so there's a number of papers that have been
uh published over the lastseveral years that uh start to
uh address this question.
And uh while there's still, Ithink, a little bit to uh be uh
uncovered, I I think what it'scoming down to is uh a couple of
key points.
(01:31):
Uh first, uh does the policy orelements of the policy feel like
a loss?
Uh one of the things that uh weknow from a lot of research in
uh economics and psychology isthat people hate losses.
Uh financial gains.
As opposed to gains, yes,relative to gains, uh losses.
SPEAKER_01 (01:53):
It took research to figure that out.
Yeah.
SPEAKER_00 (01:56):
Believe it or not.
Uh yeah.
So actually, what's beeninteresting is uh the
researchers have put somespecifics on these, uh uh what
we all know to be true.
And so uh uh a loss has roughlydouble the impact of an
equivalent gain.
So, you know, if you found$20 inyour pocket versus you got a$20
(02:17):
parking ticket, that$20 parkingticket makes you roughly twice
as unhappy as that uh findingthat$20 bill in your pocket made
you happy.
Uh so it's not uh uh perfectlydouble, but there's some uh uh
ballpark uh figures that we canmake some uh uh take some
actionable insight from.
(02:37):
But in terms of how this playsout in returns, uh a couple of
uh researchers have been lookingat different elements of
policies um in isolation.
Um in, well, I shouldn't say inisolation because they're always
together in a policy document,but they've really focused on
each different element uh byitself.
(02:58):
And so there's the monetaryelement.
You do you get a full refund, oris there a uh a fee taken out
when you get your return?
Um the exchange element, do youget cash back, or uh, you know,
is it the same uh form ofpayments that you get uh you
made, you get your return in, oruh is it a store credit return
(03:18):
only?
Uh there's time, you know, howmuch time do you have to make
the return?
Uh the scope.
Uh are all products eligible forreturn, or do they limit it to
full price purchases only, nosales, uh no clearance items?
And then the final one iseffort.
Uh this is going to includethings like uh a requirement
(03:40):
that you have the originalpackaging, the original tags,
the box being opened.
Uh you can only make the returncertain locations.
Uh you have to have itpre-authorized, you have to have
uh a driver's license to bescanned.
There's a whole list of thingsthat kind of fall under effort.
Now I know that's kind oflong-winded.
So to get to your question,Matt, uh, one of the things that
(04:01):
makes a policy feel harsh iswhen uh any of those elements
are structured so that it's it'sa direct loss to the consumer or
perceived as a loss.
So the monetary one for sure ishuge, uh, at least in past
research, showing that, yeah, ifyou take a fee out of someone's
return, it's gonna have a majorimpact on how they feel about
(04:23):
the situation.
Exchange falls under that aswell.
If I give you store credit backinstead of money, I'm giving you
something that's generally lessvaluable.
Uh and so it's seen as a loss,whereas the others aren't quite
so much or are aren't at allviewed in that same kind of
lens.
So loss is one piece.
(04:45):
Um, the other piece, uh Matt, interms of what uh makes a policy
feel harsh, is uh comes down tofairness perceptions.
So if a policy feels like it'sstructured arbitrarily uh or is
uh harsh towards the consumerwith no real justification for
(05:05):
it, uh that's not going to goover very well.
But if the policy is structuredso that consumers can see, oh,
okay, I understand why maybe uhthings are being restricted in
this way or why this is beingimposed upon me, uh as long as
it's justified somehow, uhpeople tend to be a lot more
(05:26):
accepting.
So loss and fairness, at leastin what we're seeing so far in
the literature and uh my ownresearch, uh that tends to uh
account for why some policiesare are are seen as harsh.
I see.
SPEAKER_01 (05:44):
Um and you know, if you're a shopper and you read
about a returns policy, you maythink, oh, this is fair or this
is harsh, or I like it or Idon't like it.
But is it is it perceiveddifferently when they're
(06:05):
actually making the returnversus reading about it?
SPEAKER_00 (06:10):
That's what I'm very interested in right now.
And uh so uh been looking atsome scenarios exploring that
very question because a lot ofthe research that's been done so
far has people evaluating uhpolicy statements on paper.
Uh not as many studies haveactually uh put people in a
(06:33):
return scenario and explored howthe various elements impact
their uh their their feelingsand their behavior.
And I think that's importantbecause um it seems to me, uh
just my own experience and alsojust looking at a lot of past
research, uh, you're gonna findsome major differences when
(06:55):
people are evaluating things uhjust on a piece of paper versus
when they're applied to them.
So um so yeah, I have a lot ofinterest in that question,
actually.
SPEAKER_01 (07:07):
Um and I know you've also looked at first person
versus third person.
Uh what changed when peoplepictured themselves in the
denial moment?
What what's the uh effect there?
SPEAKER_00 (07:23):
Yeah, so the the studies that I've been doing on
this so far uh are uh stillpreliminary.
We've just got some uh pilotstudies collected, excuse me,
pilot studies collected, and uhso we don't have uh enough data
to say uh anything with with uhcertainty, but initial evidence
(07:46):
is suggesting that, yeah, inmany cases there are some pretty
important differences.
Uh that this this all kind ofgets back to uh just the fact
that when uh thangs are madepersonal uh versus abstract or
versus applied to somebody else,uh it takes on a different life.
(08:07):
And I don't I don't know if youwant me to get into the weeds or
or not with this map, but itcomes down to justice theory and
the fact that there's multipleways in which people assess
fairness.
There's the outcome, you know,the distributive fairness of
something, and there's theprocedural justice as well,
which is uh the process by whichan outcome is reached.
(08:29):
And then there's interactionaljustice, which is uh has a lot
to do with uh does somebody feeluh treated fairly and respected
and informed during uh aprocess?
So when somebody's evaluatingsomething on paper, uh you're
you're you're doing so in a veryuh clinical state.
It's just you know, uh cut anddry, and it's really all about
(08:51):
the procedural fairness.
You look at this policy onpaper, and uh, you know, okay,
do the terms seem, generallyspeaking, fair?
Uh, but when it's applied to uhsomebody else, so it's making it
a little more tangible, right?
Someone uh is subject to this,or especially to you yourself,
uh it moves from just asituation where you're
(09:12):
evaluating the proceduralfairness or the procedural
justice of this policy and thenlooking also at the distribute,
the distributive element.
You know, what is the outcome?
It now matters a lot morebecause it's me.
And then also the interaction aswell, where uh you're gonna be
much more sensitive to uh wereyou treated fairly, uh, where
(09:34):
you've given clear informationuh about how all this was going
to play out.
And so there's a it's a muchricher uh scenario uh when it's
applied to individuals, and uhtherefore there's a lot more
opportunity for uh you knowpeople to be uh hacked off for
last lack of a better term, uh,when maybe yeah, the the outcome
(09:57):
isn't uh exactly what they'dwant, or they didn't feel they
were treated uh you know withrespect or dignity or uh weren't
informed.
So uh yeah, as soon as it movesfrom paper to uh personal, it it
becomes a much more umchallenging situation in a lot
of ways.
And I think that's important tostudy.
(10:18):
Uh the papers is one thing, butyou know, in practice, uh it's
people talking to people in a ina at a return counter.
This isn't just, you know, hey,read our policy on our website.
It's uh it what matters, atleast in my assessment, is how
people respond in reality.
And so I'm I'm really interestedin digging into that question.
SPEAKER_01 (10:39):
So a retailer can't just write a policy and then
have people read it and evaluateit.
Um because if they do that, theymight think it's gonna be
perceived more positively thanit actually will when it's
implemented.
SPEAKER_00 (10:54):
Exactly right, Matt.
What we are seeing so far isthat uh people do tend to
perceive just things on papermore positively than when
they're uh uh put into practice.
So it is a risk.
If you're uh um looking forconsumer feedback uh and you're
just looking at a uh a sheet ofpaper with a policy on it, uh
it's probably not going to uhget you the insight you're
(11:17):
looking for.
SPEAKER_01 (11:19):
So let's suppose let's talk about a return.
Return's occurring.
And let's say the return isdenied.
Like uh I know I've had thishappen.
I I bought um I bought an aircompressor and I took too long
(11:42):
to take it out of the box andyou know implement it, put it
put it together and uh but andand so I I took it out of the
box and I'm thinking this isn'twhat I want.
And so I tried to return it andI couldn't.
I was denied.
Now I went ahead and used it andit's in my garage.
(12:07):
But are there any measures orsignals that kind of predict
whether a denial will damageloyalty or word of mouth?
SPEAKER_00 (12:18):
Well, certainly um trying to assess the fairness,
the the perceived fairness ofpolicies uh in advance will help
retailers understand uh or or umpredict um how well these things
will be received.
Um but uh yeah, to some degree,um that that's uh part of what
(12:40):
I'm hoping to get into is somefuture studies.
Uh understanding uh when youwrite something on paper and
people view it and say, okay, Iknow this seems fair, but then
all of a sudden they come, youknow, wanting to make a return
and they're told, yeah, it'sbeen too long and you don't have
the packaging, uh, you know,whatever the reason, um okay,
(13:04):
how what are the nuances of theuh the thinking and emotion and
behavior that consumers aregoing to experience in that
situation?
And yeah, what can we do uh toprovide some um understanding of
how that's likely to play out?
SPEAKER_01 (13:19):
Where does framing fail?
And explain what framing is.
Um and policy design needs tochange instead about returns.
SPEAKER_00 (13:30):
Yeah.
So one approach to potentiallyum making policy stricter
without uh angering customersthat I was interested in
exploring were framing effects.
And framing effects refer to thefact that you can describe um a
(13:50):
choice or a decision or aproduct in negative terms or
positive terms, or as a gain oras a loss.
It's the same thing, but it'sjust described slightly
different.
So one classic example is uhground beef.
We all know you go to thegrocery store and it's the lean
content that is expressed on thepackage.
(14:11):
So 85%, 90%, 92%, it'sdescribing the lean content of
the ground beef.
You could just as easilydescribe that in terms of the
fat content, you know, 15%, 10%,8%.
Uh but what uh people have foundis that when you describe
something in terms of leanversus fat, or I should say the
ground beef is described interms of lean versus fat.
SPEAKER_01 (14:33):
Uh some people describe me in terms of fat.
SPEAKER_00 (14:39):
Yeah, I need to get out and uh yeah, uh do a little
more uh cardioactivity here.
I'm gonna be described in thesame way shortly, but uh but all
to say you you can easilydescribe something uh in
positive versus negative terms,and it's uh exactly the same
thing.
Uh maybe a more concrete exampleuh is uh medical procedures.
(15:01):
You can describe uh, you know,the uh let's say a surgical
intervention in terms of theprobability of survival versus
the mortality rate of theprocedure.
How you present that to apatient is going to likely have
a very strong impact on whetherthey choose to go through with
that or not.
Typically, things described inpositive terms are going to be
(15:23):
more accepted than things uhthat are described in negative
terms.
So, how does this apply toreturn policies?
Well, uh this this was just aninteresting uh little project
that I threw together a whileback, but I was curious because
past research had shown that umthe monetary element was by far
(15:46):
the most impactful.
If you charge somebody, forexample, a 15% return fee, um
they're gonna hate it.
It it elicits uh a lot ofnegative emotion and behavior.
Well, what if we described it asan 85% refund?
Same thing, but it's just kindof spinning the terms a little
(16:08):
bit.
And uh this this has been shownto be uh very effective in a lot
of other contexts.
However, in returns, uh theresults that we got showed uh,
yeah, it does nothing.
It really has no impact.
And as I dug into theliterature, it wasn't entirely
shocking.
Uh, there's some uh evidencethat shows when something is
(16:30):
just so impactful to a person,it really just has such a
profound impact on your uh youremotions, um, framing is just
not gonna help.
And so it looks like um reallythis that doesn't have a lot of
promise for helping in uh returnpolicies.
And um so that did point ustoward uh considering policy
(16:54):
design instead.
Because uh one of the thingsthat was interesting after we
did that framing study is uhwent back to the drawing board
and started looking at okay,what what are retailers actually
doing in practice today uh withtheir policies and how are they
structuring or how are they uhpresenting return fees?
(17:14):
And lo and behold, what wediscovered is contrary to a lot
of past research studies,retailers really aren't just
blanket-imposing return fees.
Uh it's it's just uh unheard ofto say basically, you know, hey,
there's a 15% return fee foranything you bring back.
It just doesn't work that way inpractice.
(17:36):
Um what we discovered was thatreturn fees, if they exist, are
limited to certain types ofproducts or certain situations.
And um, so for example, maybe umthere's a 15% return fee for uh,
let's say uh laptops or mobilephones, because these are going
to have to be inspected andrepackaged and wiped clean of
(17:59):
any personal information thatwas put on there.
And that takes time and energy.
So when that's put into thereturn policy, you know, an
explanation for these returnfees, uh, we thought, hmm, well,
this is interesting.
I wonder if uh, you know, thisis going to actually maybe make
them more palatable.
And it started looking across alot of other things as well.
(18:21):
Uh, that exchange element thathas been shown to be so
impactful as well, whether youget your cash back or store
credit, um, there's not a singlereturn policy that we could spot
where retailers were simplysaying you only get store credit
for returns.
That's what had been intested insome past research studies, but
(18:41):
that's really not how thingsplay out.
Store credit returns are givenwhen a shopper doesn't have
their receipt and transactionrecord, can't be found in the
store system, in which case themanager then can make a call.
You know, hey, maybe we'll takeit back, but you're you're gonna
get store credit, not not cashback or anything.
(19:02):
So um that kind of got us intouh the next leg of the study,
which was to start looking atfairness and and justification,
attribution as um uh as levers,or I guess I should say as tools
that retailers could use to makesome of those strict terms more
(19:24):
acceptable.
Um it's what a lot of them arealready doing, but I think
there's some other opportunity,and that's what we're exploring
next.
SPEAKER_01 (19:33):
So what do we know about the cost um structure
difference for mail in versusstore returns by product type?
SPEAKER_00 (19:47):
Yeah, I I'm not an insider, of course, and so um uh
I I'm just giving it my bestguess, so to speak.
But I've been reading a lot ofarticles on this and and uh um I
actually had an opportunity totalk.
To a former uh executive for uha major retailer who was uh uh
overseeing their reverselogistics uh just last week,
(20:09):
actually, had a chance to uhhear some comments and get some
feedback and some really greatinsight.
Uh, my understanding is that ummail in is going to be uh
obviously expensive in terms ofthe shipping, but that in some
cases um it's good to have thosereturns centralized.
It depends upon uh you knowwhat's the salvage value, um
(20:35):
what types of processing wouldhave to be done in order to make
this item resellable, um, if atall.
Um is a perishable things likethis.
Uh these types of questions willhelp determine whether it's most
efficient and effective to uhprocess this centrally
somewhere, or if it shouldinstead be managed at a store.
(20:55):
So if you can quickly put thisback on a shelf uh and sell it,
there's no problems, or if it'sperishable, uh there's a short
time window in which you couldresell, you probably want it
going back to a store.
Um store returns actually have alot of other knock-on benefits
as well.
If you get somebody in the storeto make a return, there's a
(21:16):
chance, probably a pretty goodone, they may buy something
while they're there.
Uh, or they may speak with astore associate who's gonna say,
oh, hey, uh you're returningthis for XYZ reason, but uh let
me show you maybe that issue canbe overcome and then the
customer keeps the product afterall.
So a lot of benefits to uhsending stuff in stores, but
(21:37):
stores all often aren't capableof repackaging something or
don't have space to process allthese returns.
And so um it comes down to uhthe individual stores and and or
products even uh to really get asense of which which channel is
best for the return.
SPEAKER_01 (21:58):
And let's suppose you know, suppose you're a
retailer, and I imagine thisvaries a lot by retailer too.
Um but suppose you are aretailer and you want to steer
customers towards the lower costpath.
What's a way to do that?
SPEAKER_00 (22:18):
Well, you can um certainly try to steer them in
that direction um by either ummaking that low-cost channel the
one on which the refund isprocessed the quickest.
Um, of course, you would have tomake sure that that aligns with
reality.
Uh and so you couldn't just youknow drag your feet on a refund
(22:42):
uh on a non-preferred channelunless there was kind of some
reason for it.
But trying to incentivize peopleor nudge is kind of a term you
hear often used.
Um nudging people toward themore desirable things by yeah,
making sure that uh they'll gettheir refund fastest through
that channel.
Or um you can present someinformation.
So if you do want people, let'ssay, to come to the store or
(23:04):
drop the product off physicallysomewhere, um, provide them some
uh location information when youare processing that return.
Like, hey, you know, there's afacility just five minutes away
from you.
Um you can offer discounts aswell.
Uh if you come in to make yourreturn as opposed to mailing it
(23:25):
in or you know, whatever thenon-preferred channel is, uh you
can offer uh a rebate of somekind or store credit or a gift
card or something.
I mean, all that costs money,but maybe it saves in the long
run versus the non-preferredrefund channel or return
channel, excuse me.
SPEAKER_01 (23:42):
Do you have any opinions about how companies
should track margin impact ofreturns?
SPEAKER_00 (23:51):
So this isn't going to be my specialty area.
Um, but uh you know, I I I dohave some opinions just broadly
speaking on maybe some metrics.
And um I think it's importantfor uh retailers to uh track
more than just return rates ormaybe even just the costs
(24:13):
associated with the return.
Certainly there's some salvagevalue that you can get out of
that that should be subtractedfrom that picture.
But um the impact on theconsumer in terms of um brand
perception, repurchaseintention, loyalty, word of
mouth, all these things tie toum their return experience.
(24:38):
Or I should say that there's alot of evidence that's showing
the return experience can have areally strong impact on all of
those things.
In fact, there was an articlethat was published recently in a
marketing journal, and I wasactually got a Wall Street
Journal write-up as well thatwas talking about the concept of
returnless returns.
So you may have experiencedthis, Matt, at some point
(25:00):
already, but um, if you make areturn on a product, there's re
there's there's instances nowwhere retailers are saying, you
know what, just keep it.
Yeah, I've had that happen.
I'm sorry, what was that?
I've had that happen, yes.
Yeah, yeah.
And so it's strange because youknow they're giving you this
(25:20):
product for free.
They're they're losing the thevalue uh of that product, uh,
plus the shipping uh that waspaid to get it to you, assuming
that uh the retailer coveredthat.
Um so so why are they doingthis?
Well, the it could be that thecost is just so high to uh ship
it back, process it, uh, youknow, inspect it, repackage it,
(25:41):
put it on a shelf somewhere, umthat they lose more money by
taking it back than they doletting you keep it.
And that's probably one mademotivator for it.
Uh, but in doing that math, thatthat that calculation, you know,
the cost versus um you know theum the lost margin there, um
(26:03):
it's important to also thinkabout the benefit that you get
from doing that.
The the paper I was referencinga second ago was showing that um
letting people keep things makesthem happy.
There's no surprise there, butum they looked at some specifics
in terms of uh you know the uhthe impacts on loyalty, um,
(26:24):
repurchase intention over time.
It got into even some of thenuance in terms of when they
tell you to keep it.
Um sometimes companies say, um,feel free to donate it, right?
And this um the this suggestionof something that's charitable
um or has um you know socialbenefits, I guess uh is a way to
(26:45):
phrase it, um, can enhance thateffect even further.
So um thinking of these uhscenarios as just a loss where
you know you you you've beenasked to uh you as a retailer,
you've been asked to take back aproduct, you can't you you've
really got to think about thebigger picture before you um
(27:05):
just say, okay, that this is atotal loss to us.
You you may actually be gettingsome benefit from it that maybe
could even exceed um the priceof the product or the value of
the product that you let theconsumer keep.
All right.
If you make a lifetime customerout of somebody because you've
just overwhelmed them with yourgood customer service, uh, you
(27:26):
know, that that's uh that that'ssomething that's uh uh worth
considering.
SPEAKER_01 (27:31):
You know, this is interesting too, um along those
lines, it's a little different,but it is similar in some ways,
and that is the air compressor Itold you about that I couldn't
return.
I thought, well, I can't returnit, I might as well use it,
right?
Now I'm glad I didn't return it.
(27:54):
I think that what I thought wasgonna be better probably wasn't.
This works quite well for whatI'm doing.
So that's kind of unexpectedtoo.
unknown (28:04):
Yeah.
SPEAKER_01 (28:05):
So the math on this is so complicated.
SPEAKER_00 (28:09):
It really is.
It comes down to uh individualproducts, individual shoppers.
Um it's it's it reminds me alot, Matt, of um the stock out
research from the 90s and 2000s,where um researchers and
retailers were trying to put anumber on, you know, what does
(28:29):
it cost to be out of stock of agiven product?
And the answer was uh basically,you know, the short answer
anyway, who knows?
Um it's because it's so highlyvariable what people do in
response to a stockout.
Uh you know, you may substitute,uh, if you're just, you know,
(28:49):
there happens to be a goodoption available.
Um, you may be in a bad moodthat day.
And so, you know, you leave yourentire basket in the store and
leave and storm out to gosomewhere else.
There's a thousand other thingsthat somebody can do.
And it just comes down tofactors that are very difficult
to uh predict or know on thefront end.
So I think a lot of those samechallenges apply to return
(29:14):
policy and return policyresearch.
What is a good policy?
What's what's the best way tostructure something?
How do we make policies so thatpeople do the things we prefer
them to do?
I think there are some thingsthat you can do to help with
some of that, but a lot of it isjust going to come down to the
individual and how they'refeeling that day, what the
(29:35):
circumstances they're operatingunder.
Um and that's very hard to topredict.
SPEAKER_01 (29:42):
So, Travis, um what if a what if you're trying to
return something and the policysays and you maybe as a a
shopper I I'm returningsomething.
I know the policy doesn't allowme to return this notes past the
(30:02):
date or whatever the reason is.
I can't do it.
What if the employee makes anexception?
Um and I know they're it doesn'tfit their policy, but for me
they're making the exception.
How does that affect loyalty andum and is it very costly to do
(30:28):
that?
SPEAKER_00 (30:28):
Yeah.
So I some of the existingresearch shows that situations
like that can have a real boostuh in terms of consumer
perception of the store, brandloyalty, all those types of
things, right?
If if um they strictly speaking,are uh you know, according to a
policy, you're supposed to bedenied, but yet the person
(30:51):
accepting the return makes anexception, uh, that that can
actually have some tremendousbenefit.
Now, there's some real riskthere and downside too, if these
um, you know, this items beingfraudulently returned or it's a
serial returner and it's itbecomes just uh you know um
abusive to the system in asense.
(31:12):
Um obviously you don't wantthat.
But um I am interested in thequestion of frontline employees
and um yeah, how how theirunderstanding or their
perceptions of the store'sreturn policy, the store they
work for, the return policy,does that shift or shape the way
(31:34):
that they behave and uh you knowwhether they kind of bend the
rules for some people or um youknow, or or maybe actually act
excessively harsh?
I know we're uh things aresupposed to be done by the book,
but uh I think we all know uh inpractice that uh you know
there's uh individuals uh willoften do things outside the
(31:57):
system or um kind of accordingto their own ways, if they don't
necessarily think that the maybethe policy is fair or good or
sensible.
So uh I have a lot of interestin that question.
Uh I haven't collected any dataon this yet, but that is uh
terms of uh uh direction I'dlike to go um in this space.
(32:18):
Uh that's on my radar.
SPEAKER_01 (32:20):
Travis, uh, I'm gonna ask you some questions
that are pretty relevant.
It could be like a lightninground, if you will.
Um but I know you've done a lotof research on returns and
you've thought about it a lot.
You've analyzed the policies ofmany publicly um available
(32:43):
policies from retailers, um, andyou've you've done research on
this quite a bit too, and youstill are.
So I want to ask you a fewquestions.
Um again, this is your opinionbased on everything you know.
Okay.
The first one is what's onepolicy change most retailers or
(33:05):
some retailers should test next.
SPEAKER_00 (33:09):
I would be very interested in um assuming the
retailer had the capability foruh keeping tabs on individual
shoppers, um customizing returnpolicies to shoppers to some
degree.
Um so for example, uh if you areum somebody that the retailer
(33:32):
knows to be um a frequentshopper, spends a lot of money,
or is is particularly purchasinghighly profitable items,
profitable for the retailer.
Uh maybe there's one set ofterms for people like this, and
then for uh shoppers that uh uhare are kind of come and go,
(33:53):
there's a different policy.
Or even for shoppers that areserial returners, uh, meaning
they're constantly bringingstuff back.
Uh the retailer is uh you knownot making money or maybe losing
money on these shoppers, there'syet a different type of policy
for those people.
Uh maybe a policy that gets themto shop somewhere else without
(34:14):
being angry, right?
Nudge them off to yourcompetitor instead of uh
continuing to put up with them.
Uh I'd be a little silly there,but uh I do think that the idea
of using the uh informationtechnologies that are available
today, uh maybe there's a way toactually um structure some
(34:35):
policy um that's unique to uhcertain types of shoppers.
It's risk there, of course, too,if people talk and you know,
wait a minute, you you got tomake a return, but I was told I
can't, or these, you know,whatever.
Uh that might not go over sowell.
So uh there's obviously risk andsome things that have to be
considered or worked around.
(34:56):
But uh I just think that there'sopportunity to um, you know,
maybe, or maybe there's onepolicy for everybody, but the
system allows uh the retailer toyeah, lighten it up on the spot
for certain people and uhtighten it up for others.
So um that'd be something I'd beinterested in.
SPEAKER_01 (35:15):
And what is um a metric that you think is
overrated in the return?
SPEAKER_00 (35:21):
Yeah, I'd say if if you're only looking at just
return rate, and that's that'sreally it, just you know, how
much stuff is coming back foryou know however many units we
sell, whatever.
Um I I think uh a retailer inthat situation would be missing
uh the bigger picture.
Um, it's important to thinkabout um what we talked about a
(35:44):
little bit ago, how yourleniency in return situations
can actually benefit you interms of customer goodwill, word
of mouth, loyalty, repurchase,all these types of things.
Uh, you know, your your returnsuh or your high return customers
in some cases can can still beyour best customers if they are
(36:06):
buying um high profit marginitems, they're shopping
frequently, they're bringingpeople into your store or
telling others how great it isto shop with you.
So uh if you're only looking atthe rate of return on a product
or for a customer, uh you mightbe missing a bigger picture and
making decisions that uhsuboptimize.
(36:27):
What's a common myth aboutreturns that you wish we'd um
well, maybe selfishly um as ashopper, um, you know, uh I'm
thinking about uh this um thethe push that I'm seeing to uh
try to to make returns harderand harder.
Uh you know, easy returns umaren't always necessarily a bad
(36:50):
thing, as we were just kind oftalking about.
Um they have a lot of benefitsuh as well.
So as retailers clamp down ontheir policies, um they they
they may be missing out on uh umsome some other benefits.
And so um, yeah, this notionthat uh um easy returns, uh bad
for profits, um it's a littlemore complex than that.
(37:14):
Um so certainly there's riskwith easy returns, not trying to
deny that at all, but um therethat's it's a deeper story that
needs to be uh investigated.
SPEAKER_01 (37:24):
Well, Travis, thank you so much for taking time to
visit with us about returns.
Umnichannel supply chainmanagement and retailing have
made returns a big issue and uha complicated one at that.
So thanks for sharing yourexpertise with us.
SPEAKER_00 (37:42):
Absolutely, any time.
All right.
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