Managing purchases and returns for retailers

This dissertation examines drivers of purchase and return behaviors which is essential to better manage the profit per customer. During the last decade, product returns provide a significant expense to retailers and are important to consider next to purchases. Customers thus create profit to the retailer through purchases and make costs by returning products. This thesis is comprised of a literature review and three empirical studies, presented in the form of chapters.
Chapter 2 examines the impact of an Instant Reward Program (IRP) with bonus premiums on customer purchase behavior. An IRP rewards customers directly at the moment of purchase, with small premiums at fixed spending levels, and each premium is part of a larger set of collectibles. A supplementary feature in many IRPs promotes specific brands with an extra premium, labeled bonus premiums. Chapter 3 provides a literature overview on managing product returns from a marketing perspective. Chapter 4 and 5 discuss drivers of purchase and return behavior jointly: Chapter 4 examines the effect of customer in-store browsing behavior and chapter 5 examines the impact of online customer reviews. These studies demonstrate that products returns can be managed and that retailers have multiple instruments to influence return decisions in addition to their effect on customer purchase behavior. This dissertation offers a next step in both the drivers of purchase and return decisions which retailers can leverage to create customer value and increase profits.