A contingent free shipping (CFS) policy offers free shipment of an order only if it satisfies a pre-specified threshold amount. Our study empirically documents a novel determinant of optimal CFS terms: ease-of-return experience. To reflect its impact on the CFS policy’s embedded trade-offs, a manager shall apply the following counterintuitive adjustment; set lenient (resp. stringent) CFS terms when the customer return process is convenient (resp. inconvenient).

We present our empirical findings on how bundle promotions affect consumer purchase and return behavior compared to markdowns, using a large apparel brand’s in-store purchase and return panel data. In this work, we show that bundle promotions increase the incidence and decrease the return probability of each product compared to products sold with markdowns, controlling for price, discount depth, and item characteristics.

Customers use on-line product reviews more frequently. We explore the impact of product reviews on customer’s valuation uncertainty for an experience product and how that in turn affects a monopolist retailer’s pricing and refund decisions. In a duopolistic competition, the overall sentiment of the reviews are influenced by both retailers. We show that the retailers make their returns more lenient in the presence of product reviews in both settings.