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Online retailers’return policy
and prefactual thinking
An exploratory study of USA and China
e-commerce markets
Yanan Yu
Department of Textile and Apparel, Technology and Management,
North Carolina State University, Raleigh, North Carolina, USA, and
Hye-Shin Kim
Department of Fashion and Apparel Studies,
University of Delaware, Newark, Delaware, USA
Abstract
Purpose –The purpose of this paper is to examine how return policies from online fashion retailers from
different countries (USA, China and Western European) support consumer need for uncertainty avoidance
and lower negative prefactual thinking in two different markets: China and USA.
Design/methodology/approach –A content analysis of eight international online fashion retailers’return
policies in both the China and USA markets was conducted.
Findings –US, Chinese and Western European online fashion retailers have more detailed return policies in
the USA market compared to the China market. The results also indicate that US, Chinese and Western
European online fashion retailers are more inclined to offer lenient return policies in the USA market which
helps to lower consumer perceptions of uncertainty and negative prefactual thinking.
Practical implications –Exploring online retailers’return policies and how retailers respond to consumers’
level of comfort with uncertainty and tendencies to engage in negative prefactual within the context of
different cultural markets offer valuable insight into standard retail practices necessary to retain profitability.
Despite the perception of a “global”marketplace, nonstandardization of customer service is found.
Originality/value –Although the ability of online retailers to reach global markets has increased, few
scholars have studied return policies within different cultural contexts. This study focuses on return policy as
a major influencer of prefactual thinking by reducing anticipated regret and increasing online purchase
intention in a global cultural context. The research is not only beneficial to managers who seek to increase the
profitability through globally strategic implementation of return policies but also contributes to the consumer
regret and risk literature.
Keywords Uncertainty avoidance, E-commerce, Anticipated regret, Cross-cultural, Prefactual thinking,
Return policy
Paper type Research paper
Introduction
E-commerce represents a significant proportion of overall commercial sales and contributes
to the economic process worldwide. Global retail e-commerce sales were $2.304 trillion in
2017 and is expected to surpass $4.4 trillion in 2021 (McNair, 2018). In 2018, the number of
world’s internet users pass the 4bn mark which is over half of the world’s population
(McDonald, 2018). The critical role e-commerce plays in the world economy underscores the
importance of analyzing the factors affecting online retailers’profitability.
Compared to traditional brick-and-mortar shopping, online shopping is a convenient
shopping method that reduces consumer shopping costs and fulfills the personal needs of
consumers (Foscht et al., 2013). However, online consumers take more shopping risks
compared to physical store consumers because of limited factual product information,
inability to directly inspect the product and delivery concerns (Levin et al., 2003; Wood, 2001).
Due to the uncertainties related to online shopping, consumers are more likely to anticipate or
predict negative outcomes associated with purchasing risk in their pre-purchase evaluation.
Journal of Fashion Marketing and
Management
Vol. 23 No. 4, 2019
pp. 504-518
© Emerald Publishing Limited
1361-2026
DOI 10.1108/JFMM-01-2019-0010
Received 19 January 2019
Revised 30 April 2019
Accepted 7 June 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1361-2026.htm
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Return policies are one way to minimize the inherent risk and anticipated regret of online
shopping and increase consumers’purchasing intention. However, return rates and
logistical costs (e.g. restocking fee, repackage fee, delivery cost) negatively affect company
profitability (Wood, 2001). Customer product returns are key cost drivers that routinely
reduce the profitability of the US online retailers. Based on data compiled from 50 retail
clients, consulting firm Kurt Salmon notes that online consumers return 20 to 30 percent of
apparel orders and other soft goods (Brohan, 2013). Past studies have expanded
understanding of how return policies reduce consumers’online shopping concerns and
increase their satisfaction. For instance, Pornpitakpan (2010) indicates option choice
reversibility (which refers to whether the product can be returned or exchanged) of products
can influence consumer information processing and final purchase decisions. Irreversible
products induce more anticipated regret when consumers take actions (Landman, 1987;
Tsiros and Mittal, 2000). Therefore, return policy is considered by both scholars and
practitioners to be a complex topic and a critical success factor for online retailers with
implications for profitability.
The purpose of the study is to examine the return policies across Chinese, US and
Western European online fashion retailers doing business in two culturally different
markets: China and USA e-commerce is growing fast in both the USA and China. China is
ranked first with e-commerce sales of $1.149 trillion and the USA is ranked second with
e-commerce sales of $455bn in 2017 (Tong, 2018). The conceptual framework related to
prefactual thinking and anticipated regret offers the basis to understand how return policies
may differ based on consumer tendencies to process information when making a purchase
decision. Hofstede’s (2001) uncertainty avoidance dimension is used to explain the similarity
and differences in how return policies may be presented in two cultural contexts and
correspond to inherent levels of prefactual thinking and anticipated regret. Examining the
return policy practices in the USA and China offer insight into how retail management
practices may differ based on cultural context.
Background and conceptual framework
Return policies can be described by the degree of difficulty for returning: lenient or strict.
Strict return policies create an impediment that reduces the frequency of returns by
increasing exit costs. Studies indicate high exit costs and low policy flexibility increase
consumer’s dissatisfaction level and decrease both purchase and repurchase rate
(e.g. Jones et al., 2007; Tsai and Huang, 2007). By reducing the exit costs and increasing the
level of consumer satisfaction, lenient return policies increase purchase and repurchase
rates. Previous research also shows that the effects of the retailer’sreturnpolicyon
consumer purchasing intention may differ in online retailing vs brick and mortar retailing
(Huang et al., 2011). Online consumer demand is more sensitive to return policy (Li et al.,
2013). In remote purchase contexts (e.g. online purchase and catalog purchase), lenient
return policy can lead to more favorable product evaluation and consumers are more
likely to believe that favorable return policies are indicative of high-quality products since
these firms are standing behind their products. In contrast, consumers in the strict policy
condition are more likely to question the quality of products (Wood, 2001). However, while
retailershaveextendedliberalreturnpoliciestoreduceconsumer’s anticipated regret and
attract more consumers, they also need to undertake the financial loss. The more lenient
the return policies are, the more cost retailers have to pay to accept the returns (Davis
et al., 1998). As customer abuse of return and exchange policies is a source of frustration
for the apparel industry, effectively managing return policies and consumer returns are
important to retailers (Kang, 2004). A cursory view of online retailers’return policies show
differences across the global market. For example, product items shipped from Amazon.
com can be returned within 30 days in the USA[1], while Amazon China only accepts
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e-commerce
markets
returns within seven days[2]. Scholarly research that examines a comprehensive set of
return policy traits of online retailers in a cross-cultural context is limited. In the
present study, Hofstede’s (2001) uncertainty avoidance dimension is used to explain this
research gap.
Uncertainty avoidance and prefactual thinking
Hofstede (2001) found that many applications of management theory failed due to cultural
misunderstanding when international companies were expanding their business overseas.
Prior global studies have widely adopted Hofstede’s cultural dimensions theory to measure
the performance of employees or business strategies under cross-cultural contexts. For
example, Mantalay and Chakpitak (2015) used Hofstede’s cultural dimensions to study the
impact of culture on a Western Europe based software developer offshoring its operations to
Thailand and found the cultural differences affect employee’s work performance. Thai
employees prefer communicating as a group and consider adequate work is enough,
whereas the German employees prefer individually communicating and strive for perfection
and achievement. Yang et al.’s (2013) study adopted Hofstede’s culture theory to examine
the effects of national culture on purchasing activities and found that the intensity and
efficacy of purchasing activities vary between Asia and Western Europe and Asia and USA.
Uncertainty avoidance, an important dimension in Hofstede’s cultural dimensions theory,
determines the degree to which the members of a society feel uncomfortable with
uncertainty and ambiguity. It is a dimension that indicates people’s need for predictability
and shows the extent to which a society reacts to unfamiliar risks and an unknown future.
People in a country exhibiting strong uncertainty avoidance index prefer structured over
unstructured situations, compared to people in weak uncertainty avoidance index societies.
In terms of customer service, customers in countries that score high on uncertainty
avoidance do not like uncertainty, are risk-averse, prefer to be in control and need full
understanding of the background of the subject to make a decision (Wursten et al., 2009).
Consumers generate perceptions of regret before and after the purchase (Sanna, 1998).
Customer thoughts related to alternative possible outcomes before the outcomes are known
is referred to as prefactual thinking (Sanna, 1998). In prefactual thinking, individuals
construct different scenarios that suggest negative and positive possibilities. When
consumer create an imagery of a positive outcome, consumer’s purchase intention is more
likely to increase. Conversely, when consumers perceive a possibly negative outcome,
anticipation of regret is generated (Cox and Rich, 1964). Anticipated regret is a result of
negative prefactual thinking which produces negative attitude toward a product or service
(Ritov and Baron, 1995). Anticipated regret can negatively influence online retailers because
it increases discomfort and decreases the likelihood of purchase intentions (McConnell et al.,
2000). Customers in a high uncertainty avoidance country are more likely to generate
negative prefactual thinking and need lenient return policies to reduce their anticipated
regrets (Wursten et al., 2009). On the contrary, in a country characterized by weak
uncertainty avoidance, customers are more relaxed, action oriented and need less
information to make decisions (Wursten et al., 2009). Thus, customers in a low uncertainty
avoidance country are less likely to generate anticipated regrets in their prefactual thinking
and have a lower degree of demand for lenient return policies. For this study, USA and
China were selected because they represent countries with differing uncertainty avoidance
dimensions: USA 46 and China 30 (Hofstede, 2001).
Figure 1 illustrates how prefactual thinking can be aversive to online retailers because it
produces anticipated regret; anticipated regret resulting from prefactual thinking decreases
the likelihood of online purchase intention; online retailers’return policies impact on
consumers’prefactual thinking and the lenient return policies serve to reduce anticipated
regrets. A limited number of research on anticipated regret have been applied within the
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industrial management context. The goal of the study is to investigate whether online
fashion retailers address anticipated regret for consumers in different cultures by analyzing
their return policies in markets with different uncertainty avoidance tendencies.
The following research questions were studied to investigate what aspects of different
online fashion retailers’return policies reflect consumers in different cultural markets:
RQ1. How do online fashion retailers’return policies differ based on country-of-business
with differing uncertainty avoidance dimensions?
RQ2. Are return policies of online companies for US consumers inclined to be more
lenient and relate to US consumer needs to avoid uncertainty (and consequently
lower negative prefactual thinking and anticipated regret) compared to return
policies for Chinese consumers?
Methodology
The research questions were studied based on qualitative research design methods
proposed by Creswell and Creswell (2018). Content analysis methods were used to evaluate
the return policies found in the USA and China markets using NVivo 12. Prior research
shows the increasing scholarly interest in content analysis method in a variety of
disciplines, especially business strategic management, supply chain management and other
social science disciplines (e.g. Duriau et al., 2007; Mir et al., 2018). By analyzing online
fashion retailers’return policies, the researchers are able to obtain direct information related
to the different market interactions between the consumer and online fashion brands
pertaining to consumer returns across the USA and China.
Fashion brands were selected from “The top 100 fashion companies index”published by
FashionUnited which lists the 100 largest fashion companies based on its market
capitalization[3]. To investigate the return policies of US, Chinese and Western European
online companies, eight representative brands from USA, China and Western Europe that
sold directly to consumers online in both USA and China markets were selected and the
summary of selection criteria are presented in Table I. The intent of the selective sampling
was to identify the patterns of retailer return policies across the two markets. There is no
specific answer in terms of how many samples a qualitative study should contain (Creswell
and Creswell, 2018); the researchers followed Charmaz’s (2006) saturation principle to collect
data and determine sample size.
Eight fashion brands’return policies were examined through content analysis with a coding
guide adapted from the findings of previous studies (Che, 1996; Wood, 2001) and additional
return policy components were identified by the researchers. First, a listing of return policy
components was generated to compare the differences across the brands. Che (1996) states that
consumers evaluate return policies based on whether the return is questioned, consumers need
to provide evidence or explanation for returning, and used items are accepted. Wood (2001)
states that consumers judge the leniency of return policies based on time limitation, required
return condition, refund method, and sale item returned. In addition, several online fashion
Prefactual Thinking
Return Policy Purchase Intention
Anticipated Regret
Figure 1.
Illustration of impact
of retailer return
policies on
purchase process
507
USA and China
e-commerce
markets
retailers’websites were reviewed and additional components (i.e. return shipment, return
method, and defective product returns) were included in the coding guide to build a
comprehensive coding guide that fully assesses return policy attributes within the marketplace.
Table II lists the coding guide used in the study and the reference used for each code.
Representative brands Section criteria
US fashion companies/brands
in both China and US markets
Nike
Coach
Gap
Michael Kors
Nike is one of the top three fashion brands on the list in which the market
value is more than $97bn and represents the sportswear fashion brand
market segment. Gap is the largest specialty retailer in the USA and one of
the top 5 largest fashion retailers in the world (Olanubi, 2017)
With the improvement of people’s living standards, an increasing number of
consumers can afford premium fashion brands in which the prices are at the
higher end of the mass-market spectrum yet still lower than luxury brands.
Coach and Michael Kors represent the premium fashion brands. Moreover, two
US fashion companies both have strong business in China market. According
to Tapestry, Inc. (previously known as Coach Inc.) 2018 Annual Report, the
company operates 275 retail stores in China and the net sales is $737.4m in
fiscal 2018 which Coach brand segment represented 71.8%
a
. According to
Michael Kors 2017 Annual Report, total revenue in fiscal 2017 included
$168.3m of incremental revenue attributable to the recent acquisitions,
including $151.1m related to the acquisition of China operations
b
Chinese fashion companies/
brands in both China and US
markets
Li Ning
Li Ning is the only Chinese fashion brand that does business in both
Chinese and US markets on the list. It expanded its business to the US and
opened the first flagship store in Portland, Oregon in 2010 (Madden, 2010)
Western Europe fashion
companies/brands in both
China and US markets
Zara (Inditex Group)
Adidas
H&M
According to Forbes, China is Zara’s second largest market after Spain and
the USA
c
. The sales of H&M in the US and China reached $3,075.7m and
$1,240.9m, accounting for 12 and 5% of total sales, respectively, in 2016
d
.
Adidas is the world’s second largest sportswear fashion brand after Nike. In
2016, Adidas reached sales of €19.3bn with sales in North America and
Greater China increased by 24 and 28%, respectively
e
Sources:
a
https://tapestry.gcs-web.com/static-files/0cdebad6-3861-46df-a515-07b4307a3ef5;
b
www.annual
reports.com/Company/michael-kors;
c
www.forbes.com/companies/zara/;
d
www.statista.com/statistics/252
187/sales-of-the-hundm-group-by-country/;
e
www.adidas-group.com/en/media/news-archive/press-relea
ses/2017/adidas-record-sales-and-earnings-2016/
Table I.
The representative
brands and
selection criteria
Codes Meaning
Time limitation How long the products can be returned after purchase (Wood, 2001)
Return shipment If retailers undertake the return shipment cost, includes pre-paid label, pick up service,
etc. (identified by researchers)
Return restrictions If retailers require a specific return condition of product, such as unworn/unwashed/
unused condition with original package/label/other components; If final sale items can be
returned; If special items have additional restrictions, etc. (Che, 1996; Wood, 2001)
Return method The options for returning: by mail (e.g. drop off at certain delivery location or the retailers
offer courier pick-up service) or in store return (identified by researchers)
Return processing
time
How long the retailers process the return after they confirm the return products; how
long the consumers get the refund (identified by researchers)
Return
documentation
If purchase proof (e.g. original receipt, packing slip, shipping confirmation) needed for
returning (Che, 1996)
Refund method Whether the money, store credits or gift card will be given; If the return items will be
refunded in the same form of payment (Wood, 2001)
Defective products
return
If flawed or defective items have more lenient return policy than normal products
(identified by researchers)
Table II.
Coding guide
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A preliminary analysis determined the interrater reliability in coding across items. In this
research, each brand’s return policy in one country was considered as an independent case
(e.g. Nike’s return policy in the US market was considered as one case, Nike’sreturnpolicyinthe
China market was considered as another case). A total of 8 brands and 16 return policy cases
were analyzed. First, using the preliminary coding guide the primary researcher independently
coded the return policies of three randomly selected brands in the US market. A second
researcher used the coding guide to code the same brands. The two researchers discussed the
coding guide where disagreements or questions were flagged. The coding guide was refined
with the goal of generating consistency between the two coders. Using the refined coding guide,
the two researchers reviewed the contents of all eight return policy cases in the USA separately.
Two researchers verified the final coding results of brands’return policies in the USA together
by resolving any discrepancies. In summary,8outof16cases(Thebrands’return policies in
USA)werecodedbytwocodersandachievedaninterraterreliabilityabove90percentforeach
of the eight cases. After the US return policy cases coding was completed, the primary
researcher who is fluent in Chinese coded the remaining cases of brands’return policies in China.
There were 102 sources that corresponded to the 8 codes noted above in the 16 return policy
cases of the selected brands; 53 sources related to US return policy cases and 49 sources related
to China return policy cases. We define a source as specific content in the original text of the
brand’s return policy that corresponds to a code. The number of sources indicates the frequency
of one code that has been mentioned across various cases of the return policy. Table III shows
the frequency of each code that was identified across the US and Chinese return policy cases.
Analysis of the research question began with reviewing the frequency of content mentioned
across the return policies. This allowed the researcher to acquire a broad overview of what
types of return policies are commonly communicated across company websites.
Results and discussion
The results offer insight into the ways return policies are presented to consumers in two
diverse cultural markets, the USA and China. By analyzing the similarities and differences
of the return policies, we are able to better understand how return policies of online fashion
retailers reflect and respond to US and Chinese consumers’level of prefactual thinking and
needs to avoid uncertainty. Moreover, we can also explain the underlying reasons of our
findings within a cultural business context supported by previous literature.
Time limitation, return shipment and return restrictions
Based on the frequency of mentions, we observed time limitation, return shipment and
return restrictions to be the three most commonly noted codes. Time limitation appears to be
Return policies in USA Return policies in China
Freq. of source
a
% Freq. of source %
Time limitation 8 100 8 100
Return shipment 8 100 7 87.5
Return restrictions 8 100 7 87.5
Return method 7 87.5 6 75
Return processing time 6 75 6 75
Return documentation 6 75 6 75
Refund method 7 87.5 4 50
Defective products return 3 37.5 5 62.5
Total
b
53 82.8 49 76.6
Notes:
a
Freq. of source ¼Number of specific content in the original text of the brand’s return policy that
corresponds to a code;
b
total percentage ¼total frequency/(total numbers of code×the number of cases)
Table III.
Frequency of code
identified across cases
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USA and China
e-commerce
markets
a fundamentally universal policy condition expressed across both markets; all eight US and
eight Chinese return policy cases mentioned time limitations for returning products after
purchase. We found the time allowed for Chinese consumers to return purchased products
to be narrower than US consumers (see Table IV ). The majority of fashion retailers accept
the returns within 30 days in the US market. Gap offers a longer timeframe (45 days) for US
consumers to return the products after purchase. However, Gap gives a narrower timeframe
of 30 days in the China market. Nike, Zara, H&M offers the same return time period
(30 days) across both markets. Coach, Adidas and also Chinese brand Li Ning allow seven
days for consumers to return in China. However, they are more generous in the US market
by accepting returns within 30 days of purchase.
All fashion retailers conducting online business in the USA mention return shipment and
return restrictions. This is similar for fashion retailers with online business in the China
market; the US brand Coach, does not mentions either return shipment or return restrictions in
their return policy. In fact, it is hard to find any product return policy information on Coach
China’s website except for information related to time limitation. On the other hand, Coach US
posts well-appointed return policies on the home page of its website. The reason behind this
finding may be due to Coach’s differentiated brand image in the USA vs China. The brand
image of Coach in the USA is represented by products offered at the mid to upper price range
of the mass market level while the brand image of Coach in China is more luxury oriented. For
example, at the time of data collection, the classic handbag of Coach –Swagger, started from
$350 on their US website vs approximately $800 on the China website. As a luxury brand in
China, the target market of Coach in China is the high-income group who may less likely be
sensitive to lenient return policies and reducing their risks related to online purchases.
Table V summarizes return shipment services related to in-store and mail returns. Half of
US fashion brands, Nike and Gap, offer free return service in both China and USA Michael Kors
does not provide free return service in China and Coach does not mention this service on their
Brand USA (days) China (days)
Nike 30 30
Coach 30 7
Gap 45 30
Michael Kors 30 14
Li Ning 30 7
Zara 30 30
Adidas 30 7
H&M 30 30
Table IV.
Time limitation
Brand USA China
Nike Free in-store and mail return for Nike
+member
Free mail return for Nike+member; in-store return not
mentioned
Coach Free in-store and mail return Not mentioned
Gap Free in-store and mail return Free mail return, exclude sale items
Michael
Kors
Free in-store and mail return No free return by mail unless the product has quality
problem; in-store return not mentioned
Li Ning A flat rate fee of $10.99; return label
will be subject to a $5.55 fee
Free return by mail. However, the consumers have to pay the
shipment fee first and wait for retailers to verify their return
Zara Free in-store and mail return Free in-store and mail return
Adidas Free in-store and mail return No free return by mail; in-store return not mentioned
H&M Free in-store return; $5.99 by mail No free return by mail; in-store return not allowed
Table V.
Return shipment
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website in China. Moreover, Western European fashion brands Adidas and H&M offer free
return service (either free return shipment or free in-store return) in the USA but not in China.
Although Li Ning indicates they cover the return shipment cost in China, consumers are
required to pay for the return shipment first. Li Ning’s consumers will receive reimbursement
for the return shipment expense after the company has received the product and determined
the product has met the conditions of the return policy. However, in the USA, with the
exception of Li Ning and H&M, almost all brands offer free return shipment service by mail. A
pre-paid label is included with the mailed package or consumers are able to return items in the
nearby retail stores, which makes it very convenient for consumers to do the return.
In terms of return restrictions, the majority of brands’return policies clearly state the
requirements for the condition of the return product in both USA and China. With the
exception of Nike and Adidas, most brands do not accept used or washed items and
stipulate return items should be in the purchase condition (see Table VI). Nike US requires
Brand USA China
Nike No condition required within 30 days
(includes custom Converse and
NIKEiD products); Must be unworn/
unwashed to return after 30 days;
Some exceptions apply (Nike gift
cards, Apple Watch Nike+, etc.)
The return items that qualify for the secondary sales are
acceptable (unworn/unwashed/with original package/
label/components)
e.g. Shoes: shoe box without tear, graffiti, and the
product certification at the bottom of the box should be
completed; Return shoes need to keep dry, clean,
unwashed
Clothing: The hanging tag, washing info tag, neck tag
should be completed (no tear or demolition)
Coach All merchandise must be in new and
unused condition; Personalized items
may not be exchanged or returned
Not mentioned
Gap Items must be unwashed and unworn
Final sale items cannot be returned;
Additional restrictions for items such
as swimwear
Items are in their original condition: unwashed and
unworn; Additional restrictions for items such as
swimwear, underwear, and socks
Michael
Kors
Return items should be in new,
unused condition, with original tags
attached with original packaging;
Swimwear, underwear, personalized
or clearance items cannot be returned
Return items should be in new, unused condition, with
original tags attached with original packaging; Watch,
jewelry, accessories and sunglasses cannot be returned
Li Ning Return items should be new and
unworn; Purchase gifts should also
be returned when returning products
Return items should be in new, unused condition, with
original tags attached with original packaging
Zara In perfect condition with attached
label; Items with restrictions include
swimwear, underwear, and accessories
Exchange items need to be returned
within 14 day of request
In the purchase condition and the return items have to
qualify for secondary sale with original package/label
Adidas Used and worn items can be returned;
personalized items are not accepted;
PayPal orders only can be returned
by mail
Return items must be unworn/unwashed/unmodified
with original package/label/other components;
The product cannot be returned if consumer does not
clearly state the reason for returning on the return list
H&M Return items should not be damaged,
soiled, washed, altered or worn and
that all labels and tags are attached;
Cosmetic/underwear/swimwear
bottoms/final sale items cannot be
returned
Return items should not be damaged, soiled, washed,
altered or worn and all labels and tags are attached;
Cosmetic/underwear/swimwear bottoms/final sale items
cannot be returned; Non-exchangeable
Table VI.
Return restriction
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USA and China
e-commerce
markets
return products to be unworn or unwashed if consumers want to return after 30 days, but no
product condition is required within 30 days. Adidas also states clear return policies in the
USA in that if the consumers are not satisfied with their purchase, they can return it after it
is worn or used. Moreover, Nike accepts return of personalized items in the USA. In contrast,
neither Nike nor Adidas offer such lenient return policies in China. Nike China states that
only return products that qualify for secondary sale are acceptable. In addition, the
company also lists many detailed requirements for product returns not mentioned in the US
return policy. In this regard, Adidas and Nike’s return policies are similar in China. While
Adidas’return policy emphasizes customer satisfaction and that the company stands
behind their products in the USA, the return criteria for China is detailed and strict.
Return method and return processing time
Return method and return processing time are also commonly seen in return policies in both
the USA and China markets. The return methods in the USA and China are noticeably
different (see Table VII). In the USA, all US and Western European online fashion retailers
accept in-store returns. However, in China, no online retailer allows in-store return except
Zara. Moreover, in the USA, consumers can drop off the return package at certain courier
companies (e.g. FedEx, USPS, UPS) without coordinating with the company’s customer
service. However, in China, consumers have to personally contact the shipping company
and arrange for the package pick-up after the return is confirmed by customer service
(e.g. Michael Kors, Zara, H&M, Adidas and Nike). In China, e-commerce has accelerated the
development of the express delivery system and has been built on the backs of couriers.
According to a report on China Daily, in 2016, 31.3bn parcels were sent and courier services
created over 200,000 jobs[4]. Compared to the self-service return method in the USA, the
majority of Chinese online shoppers is used to taking advantage of an abundant labor force
and use couriers that collect parcels onsite. Other brands, such as Coach and Li Ning, do not
show any return information on their China online store websites requiring customers to
liaise with the company’s customer service first which increases the difficulty of returning.
Thus, we found evidence that both US and Western European online retailers are more
inclined to offer convenient return methods in the US market compared to China.
Brand USA China
Nike Drop off at UPS or in-store return Nike arranges courier to pick up (not for all
provinces) or consumers mail by EMS/
Shunfeng, no in-store return
Coach Drop off at UPS or in-store return Not mentioned
Gap By mail or in-store (except for items marked
“mail only”)
By mail; no in-store return
Michael
Kors
Drop off at USPS/FedEx or in-store return Liaise with customer service first and contact
with delivery after customer service confirms
the returns
Li Ning Not mentioned Not mentioned
Zara Drop off at UPS or in-store return; Zara also can
send a courier to collect the return from the
address you select
In-store return or call consumer service to
arrange pick-up
Adidas Drop off at UPS or in-store return Fulfill a request first on Adidas China official
website and mail the product after consumer
gets the confirmation
H&M By mail via USPS or in-store Mail via any courier company, but consumers
need to contact by themselves
Table VII.
Return method
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Six online retailers mentioned return processing time (see Table VIII) in their US return
policies with the range being 7–14 days after receiving an e-mail confirmation (e.g. Zara,
Adidas and H&M). Gap and Coach indicate the return will be processed within a week. On the
other hand, six online retailers list return processing time as 5–15 working days in their China
return policies. Given the findings related to return processing time, there are no differences
when fashion companies set return processing time for US and Chinese online stores.
Return documentation, refund method and defective products return
The majority of brands make explicit the requirement for proof of purchase (i.e. original
receipt, packing slip or shipping confirmation) for returning products in the USA (e.g. Gap,
Michael Kors, Nike, Coach) (see Table IX). Adidas’return policy in the USA is more lenient
in this aspect. If the original receipt is not available, in-store credit will be issued. However,
Adidas’s leniency does not extend to the China market. In China, if the consumers cannot
provide original receipts, Adidas does not accept the returns. Except for the case of Adidas,
there is no significant difference in how Western Europe fashion companies set return
documentation requirements for US and Chinese online stores. In terms of refund method
(see Table X), Li Ning did not mention refund method in their return policy. However, the
return policies of select US and Western Europe brands in both China and the USA are very
similar. Most of the companies refund through original form of payment.
Online payment systems should also be noted in refund method. US and Western Europe
brands offered details concerning the third party online payment system, PayPal, in the US
market. For instance, Nike and Adidas in the USA indicate retail stores are unable to accept
returns for orders paid with PayPal; Coach indicates a refund to the original PayPal account
USA China
Nike Not mentioned 18 business days for WeChat or Alipay; 7 business
days for cash; 30 business days for credit card
Coach Within 3–5 business days of receipt Not mentioned
Gap 5–7 days for return mail Not mentioned
Michael Kors Not mentioned Up to 5 business days
Li Ning Within 1 business day once Li Ning
has the returns
Within 7 business days once Li Ning received the
returns
Zara Within approximately 10-14 days A few days after customer gets the confirmation
Adidas Within 7–10 (up to 15) business days
of receipt
Within 10–15 business days
H&M Within 14 days Within 14 days
Table VIII.
Return
processing time
Brand USA China
Nike Original receipt/packing slip is needed No receipt needed
because of e-receipt
Coach Online order invoice is needed Not mentioned
Gap Proof of purchase is required Not mentioned
Michael Kors Receipt/invoice/packing slip or gift receipt is needed Receipt is needed
Li Ning Not mentioned Receipt is needed
Zara Not mentioned Receipt is needed
Adidas Receipt or confirmation e-mail is needed; If the receipt is not available, an
in store credit will be issued at the current product price
Must with receipt
H&M Packing slip is needed Receipt is needed
Table IX.
Return documentation
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e-commerce
markets
for any new and unused merchandise can be issued within 30 days of purchase. However, in
the China market, Nike is the only one that mentioned third party online payment systems.
Chinese consumers will get the refunds within 18 days if they pay through Alipay or WeChat
Pay which are popular payment systems in China. Return policies are well explained in the US
market regarding refunds processed through different online payment systems.
The US and Western Europe fashion retailers’attitude in dealing with defective products
in the USA and China market are very different. Nike and Gap offer a relatively longer
return time for defective products (compared to non-defective products) in China, but the
return time for defective time is longer in the US market (see Table XI). Gap in the China
market allows defective products purchased at a regular price to be returned within 30 days
and defective products purchased at sale price within 15 days. However, Gap promises
defective products can be returned at any time in the US market. Furthermore, Nike
accepts defective products in the US market as long as it was manufactured within two
years, but Chinese consumers are only allowed a 90-day time limit. Adidas accepts the
defective items return within the last two years in the USA but does not mention anything
concerning defective items in its return policy for the China market.
Brand USA China
Nike Consumer can return defective products as long
as they were manufactured less than 2 years ago
Within 90 days
Coach Not mentioned Not mentioned
Gap Damaged or defective products may be returned
at any time
Regular price defective products can
be returned within 30 days, sale
products within 15 days. Gap
undertakes shipping cost
Michael Kors Not mentioned Michael Kors will arrange pick-up
and undertake the cost
Li Ning Not mentioned Within 3 months
Zara Not mentioned Call customer service to ask details
Adidas Within the last 2 years Not mentioned
H&M Not mentioned Not mentioned
Table XI.
Defective products
return
Brand USA China
Nike Original form of payment;
Nike stores cannot refund PayPal accounts and may
instead offer a gift card at the manager’s discretion
Original form of payment
Different payment forms have
different processing time
Coach In the original form of payment with an original online
order invoice (includes PayPal);
Without an original online order invoice, a refund will be
issued for a Coach Merchandise Card at the lowest price
within the past 30 days
Not mentioned
Gap Original credit card used for purchase Not mentioned
Michael Kors Original form of payment Not mentioned
Li Ning Not mentioned Not mentioned
Zara Original form of payment Original form of payment
Adidas Original form of payment;
Adidas retail stores are unable to accept returns for
orders paid with PayPal;
PayPal orders can be returned by mail
Original form of payment
H&M Original form of payment Original form of payment
Table X.
Refund method
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Li Ning stipulates defective product returns in its Chinese return policy. Li Ning accepts
defective products return within three months and provides free return service in China.
However, Li Ning also lists many details in defining “defective items”to limit the returns.
Moreover, Li Ning used many technical garment terms, which may be difficult for
consumers to understand, in its defective products return policy. These details place
restrictions on the consumer’s right to some extent. In contrast, in the USA, retailers do not
present as many limitations on returning defective items. Given the findings above related
to defective products return, we found evidence that the majority of brands are inclined to
offer more lenient return policies in the US market.
Of the codes studied in the content analysis, information on refund method and defective
products return showed the largest difference between China and the US. First, US and
Western Europe brands offered detailed information concerning utilizing third party online
payments in the US market compared to China. This type of elaboration may be explained
by the reasoning that the online payment technology appeared earlier in the USA when
multiple payment systems were being concurrently utilized. For example, PayPal had its
initial public offering in 2002. Both Alipay and WeChat Pay emerged a few years later but
were only widely used in the past few years in China after smartphones became popular.
However, Alipay has already overtaken PayPal as the world’s largest mobile payment
platform in 2013 (Heggestuen, 2014). It is surprising that third party payment systems in
online retailers’refund policies are rarely mentioned in the China market. With the
increasing market shares of Alipay and WeChat Pay, the researchers believe there will be
more online retailers explaining the Chinese online payments in their return policies in
the future. Second, policies concerning defective products return is specifically addressed in
three out of eight US return policy cases compared to five out of eight China return policy
cases. The low frequency percentage in US market is not expected. The US group need more
guarantees to reduce their negative prefactual thinking before purchasing as they have
higher tendencies to avoid uncertainty. However, we note that the higher presence of return
policies concerning defective products does not necessarily indicate that brands in the
market in China are more lenient in their handling of defective goods. Five online retailers
mentioned defective products return in China return policy cases; three online retailers
(Nike, Gap and Li Ning) operating in the China market offer a relatively longer return time
period and free return shipping for defective products in China with fine details for defining
“defective items,”while the other two retailers did not give any specific return time period
for defective items. However, although only three retailers mentioned defective product
return policy in US market, all of them offer extremely lenient return time and no extra
condition requirements for defective products in the USA.
In summary, the majority of brands are inclined to offer more lenient return policies in
the US market where the level of uncertainty avoidance is high. Lenient and consumer
friendly return policies allow for less negative prefactual thinking related to purchase errors
and risks as well as uncertainties stemming from purchasing decisions. As mentioned
above, most brands originating from the three countries (USA, China and Western Europe)
set different return policies across their online stores in the USA and China markets. In
general, they were more inclined to be liberal for returning products in the US market,
especially regarding return time limitation and defective products return. Also, both US
brands and Western European brands are more likely to offer free shipment service and
convenient return methods in the US market compared to China. In dealing with the issue of
return restrictions and return documentation, the majority of brands treated the US market
and China market equally, whereas two global sportswear fashion brands, Nike and Adidas,
are more restrictive in receiving returned products in China. For the most part, the return
processing time and refund method were similar in both US and China markets. However,
the refund policy is better explained regarding online payment systems in US market.
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USA and China
e-commerce
markets
Conclusion and implications
While there are certain types of return policies that are commonly mentioned, the details
relatedtoeachreturnpolicytypeofferaninterestingpictureofhowreturnpoliciesare
implemented differently across the two country markets. Our findings show online
fashion retailers in the US market to have more detailed and flexible return policies
compared to the China market. This finding corresponds with the US cultural group’s
tendencies to avoid uncertainty and the need to alleviate uncertainty related to any
decision-making with detailed public facing information on return policies. Applying
and extending Hofstede’s (2001) research, higher levels of uncertainty and higher level
of negative prefactual thinking would more likely evidenced across the US population
within an online consumption context compared to the Chinese population with lower
levels of uncertainty.
Our online retail management study supports the connections of uncertainty,
prefactual thinking, and cultural groups; we found that US, Chinese and Western
European online fashion retailers are more inclined to offer lenient return policies in the
US market (high levels of uncertainty) to lower consumer perceptions of uncertainty and
negative prefactual thinking. Our study offers strong evidence that retailers adopt retail
return policies that reflect the levels of uncertainty perceptions across the consumer
markets in the USA and China. The example of return policies found in this study offer
evidence that fashion brands in the US market offer more information and consumer
friendly services that builds confidence in consumers and lessens uncertainties related to
the purchase process.
The more favorable product return environment evidenced in the US market offers
insight into the consumer-centric market system of the western market. While cultural,
economic, social and technological factors may influence fashion brand’s tendencies to
adopt a less lenient return policy in China, the equity or fairness in conducting retail
business across the globe appears to be somewhat lacking. Perhaps the expectations set by
the consumer population may differ due to their own unique cultural characteristics and
perceptions of fairness may differ based on their own cultural lense. Nonetheless, brands
should make every effort to avoid geographical and country bias.
This study did not aim to explain the level of consumer satisfaction with return policies
across the US and China markets but instead examined the differences and similarities of
the return policies of online fashion retailers across the two countries in reference to the
country’s inclination to avoid uncertainty and generate prefactual thinking. Similar to many
content analysis research based on written documentation, this study is interpreted from
verifiable facts in which a pattern of findings can be identified. Nonetheless, the consumers’
perspective, taking into the consideration of marketplace dynamics within the two cultural
contexts, is valuable information. Further study on this topic is recommended to include
interviews from local consumers across the two countries to obtain the perspectives of
return policies and probe the consequences of unequal return policy and differing
perspectives of consumer service. Considering the lack of cross-cultural research in the
return policy area, further study is strongly recommended on this and other relevant topics
that examine the company and consumer relationship.
Notes
1. www.amazon.com/gp/help/customer/display.html
2. www.amazon.cn/gp/help/customer/display.html
3. https://fashionunited.com/i/top100/
4. www.chinadaily.com.cn/business/2017-01/05/content_27872154.htm
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Corresponding author
Hye-Shin Kim can be contacted at: hskim@udel.edu
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