Remote purchase environments: The influence of return policy leniency on two-stage decision processes

The growth of catalog sales and the enormous potential of e-commerce elevat es the importance of understanding remote purchase. Remote purchase environ ments differ from traditional bricks-and-mortar purchases in that the purch ase decision is more likely to be framed as two separate decisions: consume rs' decisions to order and, upon receipt, their decisions to keep or return the item. These two decisions are separated by a period of time, and cruci al experiential information often is available only at the second decision point (i.e., after receipt). Consumers' initial lack of experiential inform ation makes product choice more risky. Return policy leniency is one way to minimize the inherent consumer risk, but retailers may avoid instituting o vertly lenient policies because they expect increased return rates. However , the endowment effect suggests some surprising benefits of return policy l eniency to the retailer. Results from three experiments provide support for the idea that product ownership depends more on perception than possession .