Save money: Researchers have found that bundling offers ultimately cost buyers

WASHINGTON (DC News now) – Researchers found that bundling deals and similar promotions often backfires on major retailers and consumers.

Programs are designed to clear inventory to make room for new products and often offer shoppers a discount if they purchase multiple products.

A study conducted by researchers at the University of Maryland’s Smith School of Business found that retailers get more returns when they run such promotions than if there were no promotions at all.

“The goal is not only to get things out the door the first time, but also to keep them in the hands of consumers, because this flow of returns is a headache for retailers,” Dr. Wedad Elmaghraby.

Emlaghraby is dean of operations management at the Robert H. Smith School of Business and led the study.

She analyzed data from a large retailer known for selling jeans. She found that when the retailer implemented bundle discounts, it processed more returns than if there was no sale.

“The returns process means that for a brick-and-mortar retailer, around 15 to 20% of goods go back to your physical stores. If you’re an online retailer, you may have more than 35% of the purchased items on your virtual shelves, your warehouses, coming back to you,” she said.

There are also costs for the buyer. Often they end up paying full price for the items in the package that they want to keep.

“They’ll put all these carrots in front of you to try to get you to increase the amount you spend or the number of things you buy,” Elmaghraby said. “You buy something and you think, ‘I like this, but let me go home, let me try it, let me see how it feels.’ We call this adjustment uncertainty. If I want to return one, I end up paying full price for the other because I only get the discounted price if I keep two.”

Return policies also come with costs and potential complications for buyers. Sometimes purchases include free or discounted shipping.

If items are returned and the order value falls below the shipping benefit threshold, the buyer will be responsible for the cost of returning the item.

“I would just say to consumers out there: read the fine print. And it’s beneficial for retailers that consumers read the fine print,” Elmaghraby said.

Adobe predicts shoppers will spend more than $240 billion online this holiday shopping season.