Thanks to Behavioral Design: Millions of returns could be avoided in e-commerce

Returns are a burden on CO₂-The e-commerce companies' bottom line is hugely impacted. They also cost a lot of money and time for customers. So there's no question that reducing the number of returns is in the interest of everyone involved. But how can online retailers encourage their customers to shop in such a way that fewer returns are incurred? The consulting company elaboratum, together with behamics and the University of St. Gallen, conducted the world's largest field experiment with more than 100,000 online shoppers. Partners in the study were the Leaders for Climate Action initiative and the German Retail Association (HDE). The study empirically investigated the impact of behavioral psychological interventions on customers' return behavior. The study found that the use of behavioral design can save millions of returns and thousands of tons of CO₂ avoid

Agreement on the negative consequences of returns

Both retailers and customers want to reduce the number of returns. After all, retailers pay an average of around 20 euros per returned package. Customers usually pay nothing, but it takes them an average of over half an hour to return an order. Not to mention the CO₂-emissions: These amounted to 238,000 tons per year as a result of returns. This is equivalent to 125,000 car journeys from Hamburg to Cape Town - every year! In other words, returns make e-commerce a real CO₂-slinger. If returns could be effectively avoided, then online retailing could reduce its CO₂-balance sheet massively.

An intention is far from being an action

But if the facts should actually be known: Why, then, is so much still being sent back? One explanation is provided by the so-called "intention-action gap" (elaboratum, 2021). We all want to live more sustainably and help reduce the volume of parcels by avoiding unnecessary returns - so the "intention" is there. Nevertheless, the returns rate has not been falling significantly for years - the "action" is obviously lacking. Because at the moment of decision, there is a lack of effective impulses to convert one's own good intentions into concrete actions. To find out whether behavioral psychological interventions can influence the return behavior of customers, elaboratum (Dr. Philipp Spreer), behamics (Dr. Thilo Pfrang) and the University of St. Gallen (Dr. Marc Linzmajer) conducted a behavioral economic return experiment.

Experiment with Behavioral Design

Can a reduction in the return rate be achieved with the help of behavioral psychological interventions? The study aimed to clarify the question of whether behavioral psychological interventions can close the gap between "intention" and "action" and significantly influence the return behavior of customers. For this purpose, the real behavior of users in different online stores was analyzed and evaluated. The basis for this was randomized experimental designs: Visitors to the online stores were randomly presented with one of several stored interventions at a specific point of contact (e.g. order confirmation when completing a purchase) or triggered by a specific action (e.g. when several sizes of an item are placed in the shopping cart). Examples for such interventions are references to the behavior of other customers (social norms) or to the personal loss of time caused by a return (loss aversion). The reactions to the interventions were then compared with the behavior of customers who did not see a corresponding message. This procedure ensures that the measured differences can be attributed without doubt to the effect of the respective intervention. It was thus possible to determine which intervention had a return-reducing effect and how strong this effect was.

The result: the use of Behavior Patterns reduces the return rate by around 4%

The study results prove that behavioral psychology-based interventions can lead to significant behavioral changes - without any monetary or restrictive measures at all. Across four experiments conducted, it was evident that the rate of returns can be reduced by around 4 % even with the tools used in this study. Further conceptual refinement of the interventions, additional behavior patterns, and training of the intervention algorithm could increase this to at least 5 %, the authors said. However, in figures, 4 % fewer returns alone means 15.75 million fewer return parcels annually in Germany and thus around 13,000 t less CO₂ - to compensate for this amount, we would have to plant 13 million large trees.

Source and further information: elaboratum