How to Reduce Product Return in the E-Marketplace: A Technology Perspective

Product return is a major issue for e-marketplace sellers because it restricts profit growth. E-commerce customers return about one third of all transactions each year, representing about ten percent of revenue. In China, a new regulation requiring online sellers to provide a money-back guarantee within seven days without reason has intensified the need to reduce the rate of returns. Drawing on the stimulus-organism-response framework, we investigate how sellers can use various platform-based technologies (e.g. pricing-, marketing-, product presentation-, and customer service-oriented technologies) along the online exchange process to increase customer satisfaction and reduce the rate of returns. The hypotheses will be tested using a unique longitudinal dataset of 40,000 seller-month observations from China’s biggest e-marketplace, Taobao.