Home > Articles > Software Development & Management

The Special Challenges of Electronic Commerce

While pure Internet retailers have preoccupied themselves with building attractive Web sites, launching huge offline marketing campaigns, and trying to create the coolest place to shop, they have neglected the very physical processes of product returns. Online product returns are skyrocketing, and as illustrated in Figure 10-3, the trend shows returns tripling between the years 2000 and 2004. Why have so many pure dot-com retailers overlooked this huge problem?

Some of the reasons these electronic commerce retailers have yet to fully develop returns policies and processes are

  • Relative Unimportance. Sound familiar? Online retailers, like their offline counterparts, have their priorities elsewhere. Most online merchants are so busy setting up their sites and attracting customers that they have relegated product returns to the back burner.
  • FIGURE 10-3 Online Product Returns

    Source: BizRate

  • Unknowns. There are so many factors that most online retailers don't know when they start out. They don't how much volume they are going to have or how they are going to handle it, so they start out handling everything manually. Then, if the site is successful, they are inundated with orders and with returns, and they are caught in a real bind.

  • Lack of Experience. Many online merchants have never sold anything before, or have very little retail experience. They don't know the importance of strong return policies and procedures, and they haven't had the years of hard-won experience that offline merchandisers have had.

  • Multiple Product Sources. In addition, online retailing is often more complex, as many dot-coms sell products from multiple manufacturers who drop-ship their products directly to the customers. Each manufacturer may have its own return policies and its own procedures, creating some very complex return scenarios.

In contrast to the lack of interest in return policies and processes by online retailers, online customers are very interested in how their returns will be handled. In fact, in a survey of 9,800 e-shoppers, BizRate found that return policies were enough to turn some potential buyers away. These include the inability to receive credit on a credit or debit card (85 percent) followed by a time limit to return products that is "too short" (68 percent).

FIGURE 10-4 Customer Attitudes towards Returning Items Bought Online

Source: BizRate.com, 1999

Figure 10-4 shows that fully 94 percent of those surveyed are influenced by an online merchant's return policies.

The three leading products returned were clothing (27 percent), computer software (20 percent), and books (15 percent). The majority wanted refunds, although exchanges were also favored, as shown in Figure 10-5.

FIGURE 10-5 Type of Action for Returned Items

Source: BizRate.com, 1999

Tips for Internet Retailers

Although the rest of the chapter on reverse logistics is relevant to e-tailers, there are a few features that can be built into a Web site to help start the Internet retailer out on the right foot.

Start Out Backward. First, try to design your systems with forward and reverse logistics as a top priority. Design from the warehouse backward. Regardless of how attractive your site is, if you can't handle product returns, the customer won't come back.

Make the Presentation Accurate. You can't try on clothing on the Web, so some people are simply buying the small, medium, and large sizes of an item, seeing which one fits best, and sending the other two back. One of the biggest ways to keep returns down is to make sure that the quality of the images and the information that you get to the customer in terms of the fit, size, and so on is accurate. The same concept applies to other products-the more information you can give (specs, colors, scale, etc.) the better off the shopper is.

An Impulse Buy Can Mean an Impulse Return. One-click purchase technology has made it easier than ever to buy an item on impulse; however, buyer's remorse can set in immediately after clicking the Buy button. Build in a facility so that when an order is created online, a cancel option is created and remains online for an hour. Some retailers are finding that the cancel button is hit on average three times for every hundred "quick buys."

Tell the Customer Where to Go. It is amazing how many sites ship products without instructions enclosed on how to return the product. This forces the shopper to get back online to find out what to do. This is compounded by the fact that since many online retailers outsource fulfillment to other companies, the items might need to be returned to a different address than they were shipped from. Detailed return instructions and return policies should be included both online and offline with the product packaging.

Absence Does Not Make the Heart Grow Fonder. The chances of a return increase when the time between the purchase and the receipt of the product is prolonged. Along with providing online order tracking, you should proactively keep customers advised via e-mail if a product's shipment status is taking longer than it should.

Go Configure. Sites that offer online product configurators are noticing a dramatic drop in product returns. By giving customers the ability to configure products such as PCs online, the final product order is less prone to error because customers can choose specifications at their leisure and even take a break from the task and finish it later. Dell Computers found that their rate of product returns was actually lower from customers who had configured their own PCs online versus those calling Dell for help from live sales reps. Include Online Tools. FedEx, UPS, and the U.S. Postal Service (USPS) have free online tools that merchants can integrate into electronic commerce sites that will make product returns a lot easier. To use USPS's Electronic Merchandise Return Service, online retailers must obtain a merchandise-return permit and set up an account at any local post office. When a customer alerts the online retailer of the need to return an item, the retailer provides the customer, via the Internet, with a merchandise return label, which the customer prints and applies to the package being returned. The package can then be tendered to a letter carrier, dropped in a collection box, or taken to the nearest post office. Federal Express's online returns-management system is called NetRe-turn. It captures customer information, schedules pickups, arranges transportation, and tracks the status of returned goods-all online. All the customer has to do is call the merchant and request a return authorization. Once the shipper transmits the shipment details, FedEx's information system takes over. It even prompts the merchant to follow up when items are not picked up as scheduled.

Capitalize on Click and Mortar. Companies that are hybrid online and offline retailers ("Click and Mortar" companies) can create a real competitive advantage by offering online shoppers the option to return products at their physical locations rather than using a package delivery service. This added convenience also creates an opportunity for an online shopper to come into the store and buy even more after their return has been processed.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020