The effect of information on money-back guarantees on brand attribute perceptions and choices in competitive markets

During the last decade, the share of online purchases in the apparel market has increased substantially. However, the quantity and the costs of handling product returns negatively affected various fashion category profits. Some retailers responded by reducing money-back guarantee quality or offering deep discounts to mitigate risks, though the long-term profitability effects remain unclear. This study analyzes how comparative information on money-back guarantees and pricing strategies influences buying decisions. The authors conduct research based on extant literature, an analytical model, and an empirical study in the Israeli apparel market. While such comparative information affects consumer perceptions of brand attributes to a certain extent, it only modestly affects purchase probabilities. As managerial takeaway results recommend being cautious when generously extending money-back guarantee duration periods beyond the requirements set by regulators because such extensions might be costly but less impactful.