Talk to be delivered by Prof. Nitish Jain, London Business School 

20 September, 2024, Bengaluru: The Office of Research and Publications (R&P) at IIM Bangalore will host a research seminar on, ‘The Role of Return Environment on Contingent Free Shipping Policies’, to be led by Prof. Nitish Jain, London Business School (Production & Operations Management/Decision Sciences area), at 3.30 pm on 27 September 2024, at Classroom P-22.  

Abstract:  

Problem Definition: Contingent free shipping (CFS) policies, whereby consumers get free shipping if their orders are greater than a certain amount, are commonplace. One objective of a CFS policy is to nudge customers to place larger orders, either by adding additional items and/or buying more expensive items (order-swelling). However, a less desirable possible outcome is that customers pad their orders to avoid paying the shipping fee, but then return the opportunistic/impulse-purchase items later (return-swelling). A retailer designing the CFS policy’s terms – threshold and shipping fee – should balance these competing trade-offs. The research studies how order-swelling or return-swelling behavior induced by a CFS policy is moderated by the retailer’s return environment, specifically the ease-of-return-experience (EOR) for customers. 

Methodology/Results: The researchers collaborate with a retailer who switched across multiple CFS policies over time. Their difference-in-differences empirical strategy builds on these switches, and location-based variation in the EOR. They find that the retailer’s return environment can considerably impact the relative profit performance of the CFS policies. Furthermore, they find a statistically significant moderation effect of EOR on both the order- and return-swelling responses. A model-free counterfactual analysis reveals that return swelling is the key driver of the observed contrast in relative profit performance of CFS policies across the two EOR market types. 

Managerial Implications: The study documents a novel determinant of financial performance of a CFS policy: the ease-of-return experience. The analysis indicates that the collaborating retailer would be better off selecting a (relatively) lenient CFS policy in more convenient EOR markets and a (relatively) stringent CFS policy in less convenient EOR markets. 

Speaker Profile: Prof. Nitish Jain holds a PhD in Management Science from INSEAD. His research interests focus on global supply chains, and on the use of big data and empirical methods to improve supply chain management. His work has appeared in Management Science and Operations Research, and won prestigious student paper competitions. Before joining the PhD programme at INSEAD, he worked at a real estate firm and in the technology industries. He has an MBA degree from the Indian School of Business and Bachelor’s and Master’s Degrees in Mathematics and Computing from Indian Institute of Technology, Delhi, India. 

Webpage Link: https://www.london.edu/faculty-and-research/faculty-profiles/j/jain-n