While e-commerce sales continue to grow, product returns remain a key risk for online retailers’ profitability. At the same time, credence goods such as sustainable products become increasingly important in retailing. This study aims to combine these two developments and empirically investigates the effect of credence goods on product returns and sales after returns in e-commerce. Furthermore, we assess how third-party assurances can help organizations to positively affect customer behavior and reduce product returns of credence goods. Our research is based on unique data from a large-scale online field experiment with 35,000 customers combined with data of more than one million past transactions of these customers. Surprisingly, the results reveal that credence goods are associated with lower product returns than experience goods. Adding a third-party certificate to the online product description helps to reduce product returns and increase sales after returns. We find that customer relationship strength and price consciousness act as boundary conditions for the certificate to reduce product returns. Our research contributes to signaling theory and extends IS literature on product uncertainty and returns to the field of credence goods. Furthermore, we provide relevant insights for e-commerce practitioners on how to manage sales and returns of credence goods.
Feuß, Sebastian and Brettel, Malte, "Credence Goods in Online Markets: An Empirical Analysis of Returns and Sales After Returns" (2018). Research Papers. 147.