Real e-customer behavioural responses to free delivery and free returns

This study aims to explore the influence of free delivery and free returns on the purchasing and return behaviour of real e-customers in the marketplace. To accomplish this goal, we conducted the study as a fully randomised and controlled experiment in cooperation with nelly.com, a Nordic e-commerce site that specialises in fashion and beauty. Our results suggest that a lenient delivery policy is associated with increased order frequency, decreased average value of purchased items, increased probability of return, and increased average value of returned items. In addition, a lenient return policy was found to be associated with increased order frequency, a decrease in the average value of orders, a decrease in the average value of purchased items, and increased probability of return. However, the effect sizes are generally small, and we conclude that factors such as legislation and competition often force e-tailers to offer free delivery and free returns even though such offers probably would not have been profitable otherwise.