Articles, Apparel, Fashion & Retail

“Bracketing Behaviour in E-Commerce Fashion Retail: Examining the Role of Size Uncertainty, Profitability Trade-offs, and Return Policy Strategies”

“Bracketing Behaviour in E-Commerce Fashion Retail: Examining the Role of Size Uncertainty, Profitability Trade-offs, and Return Policy Strategies”
Published on 
Author: TEXTILE VALUE CHAIN
Ms Priyasha Mishra, Fashion Management Scholar, Department of Fashion Management Studies, National Institute of Fashion Technology, Ministry of Textiles, Govt. Of India, Daman Campus.

Ms Priyasha Mishra, Fashion Management Scholar, Department of Fashion Management Studies, National Institute of Fashion Technology, Ministry of Textiles, Govt. Of India, Daman Campus.

Abstract

Sizing remains a major challenge for online apparel retailers, as shoppers often cannot determine the best fit despite detailed product information. To manage this size uncertainty, many consumers engage in “bracketing,” ordering multiple sizes and returning those that do not fit. While this practice increases return rates and associated costs, it can also boost sales by reducing purchase hesitation. As a relatively new retail phenomenon, the overall impact of bracketing on retailer profitability remains unclear.

For online apparel retailers, sizing has proven to be a particularly thorny challenge - no matter how much information is provided online, it is often impossible for an online shopper to determine exactly which size of an apparel item will fit her best. Given the increasing ubiquity of free returns (full refund, no return shipping charge), consumers often manage this size uncertainty by bracketing their online apparel purchases, i.e., ordering additional sizes with the intention of keeping the one that fits best and returning the others. Since bracketing is a relatively new phenomenon in retailing, its net effect on retailer profits is not well-understood. From a retailer's perspective, bracketing leads to an increase in consumer returns and the associated costs, which can be quite substantial. On the other hand, bracketing also alleviates consumers' concerns about size, and can drive higher net sales. In this paper, we establish how price can be used as a lever to influence Consumer Bracketing behaviour, and examine the impact of bracketing on the profits of a monopolist retailer who offers free returns. We provide prescriptions on when retailers should encourage and discourage bracketing by focusing on three key parameters: the reverse logistics cost, consumers' hassle cost, and a product's match probability.

Introduction

The rapid expansion of e-commerce has fundamentally transformed fashion retail, yet one persistent challenge continues to undermine retailer profitability: the inability of consumers to accurately determine their correct size prior to purchase. Unlike physical retail, the online environment strips away sensory cues, leaving shoppers reliant on size charts and product descriptions that frequently fail to bridge the gap between expectation and reality (Balaram et al., 2022). This limitation gives rise to a phenomenon of growing academic and managerial significance — consumer bracketing.

Bracketing refers to the practice whereby consumers, faced with size uncertainty, deliberately order multiple sizes of the same product with the intention of retaining only the best-fitting item and returning the remainder (Balaram et al., 2022; Xu et al., 2023). Facilitated by the widespread adoption of free return policies, bracketing has evolved from a niche consumer workaround into a mainstream purchasing strategy, contributing to the $212 billion worth of merchandise returned to U.S. online retailers in 2022 alone (Karl & Asdecker, 2024).

Bracketing presents retailers with a double-edged challenge. While it generates substantial reverse logistics costs, it simultaneously alleviates consumer purchase hesitation and can stimulate higher net sales (Saarijärvi et al., 2017). This tension renders the net impact of bracketing on retailer profitability insufficiently understood in existing literature.

Against this backdrop, this study investigates how pricing can be deployed as a strategic tool to influence consumer bracketing behaviour and its effect on the profitability of a monopolist online apparel retailer offering free returns. Specifically, the paper focuses on three key parameters: the retailer's reverse logistics cost, the consumer's hassle cost of returning items, and the product's match probability. By developing prescriptive insights around these parameters, this study contributes to both the theoretical understanding of bracketing and the practical toolkit available to e-commerce practitioners.

Objectives

  • To examine how size uncertainty drives consumer bracketing behaviour in e-commerce fashion retail.
  • To analyse the impact of bracketing on online retailer profitability, considering both return costs and net sales gains.
  • To identify key parameters that determine whether retailers should encourage or discourage bracketing through pricing and return policy decisions.

Literature Review

(Xu.et.al) Consumer behaviour is changing in the e-commerce age for apparel products. More and more consumers tend to bracket, which means they purchase multiple versions of the same product to try at home and return those that do not meet their requirements. This bracketing behaviour can increase the likelihood that consumers buy the good-fit products. However, the tsunami of returns from bracketing has become challenging for online retailers.

(Xiaohong Chen.et.al) Product returns often result from online consumers' uncertainty about product valuation due to the absence of physical inspections before purchase. The proliferation of product variety further complicates consumers' choices and intensifies their uncertainty. To mitigate this issue, consumers increasingly choose to purchase multiple versions (e.g., colours, sizes) of a product with the intention of returning part of the order. After accurately assessing the match and value of each item at home, they keep the most satisfactory one and return the rest. This emerging practice is referred to as “Bracketing Purchase” (Nageswaran et al. 2020). As Narvar reports, 40% of consumers have engaged in bracketing for at least some of their purchases. This number surges to 62% and 58% in 2020 and 2021, respectively. Bracketing is particularly prevalent in the apparel category, where multiple sizes and colours are often available (Narvar 2017, 2020, 2021). It defers consumers’ decision-making from before to after purchase and reduces hassle costs compared with general online shopping (e.g., the complexity of product information search and comparison) and offline shopping (e.g., traveling to the stores, waiting in line for fitting). Owens (2021) points out that while bracketing can be a boon for consumers, it may be a bane for retailers, or even negatively impact both. However, Owens (2022) further illustrates that product uncertainty in online shopping may lead to two possible choices of consumers: bracketing to find a perfect item or abandoning the cart. Notably, the average rate of cart abandonment in online retailing is 69.82%, cautioning retailers to trade-off between losing a sale and properly responding to bracketing. As UPS (2019) suggests, retailers should seriously consider this consumer mentality and embrace it as a service offering.

(Joshua.et.al.) Unique consumer behaviours, such as ‘wardrobing’ (purchasing items with the intent of brief use before returning) and ‘bracketing’ (buying multiple sizes or styles with the intention to return those that don’t fit), are prevalent in fashion but rare in other sectors (Pei and Paswan, 2018, Whittaker-Wood, 2019). These behaviours contribute to a high volume and complexity of returns in fashion, unlike the more predictable, functionality-driven returns seen in other industries where returns are often functionality-driven, such as product malfunctions, compatibility issues, or feature limitations, that are generally easier to assess and manage within standardised return frameworks (Harris, 2008, Ülkü and Gürler, 2018).

(Andrew, Vogue) From a consumer behaviour perspective, bracketing is driven largely by size uncertainty and lack of tactile experience in online shopping. The article reports that a significant proportion of consumers intentionally over-purchase, with around 58% admitting to buying more items than they intend to keep. This aligns with existing literature suggesting that limited product information and inability to physically evaluate garments lead consumers to adopt risk-reduction strategies such as bracketing.

It is further emphasized that the economic implications of this behaviour for retailers. Handling returns is significantly costly, with return processing expenses reaching up to 66% of the product’s original price. Additionally, high return volumes create logistical challenges, including warehouse congestion and increased labour requirements. These findings support prior research that identifies reverse logistics as a major cost driver in online fashion retail and a critical threat to profitability.

(Klas Hjort.et.al) A trend towards more liberalized or lenient returns policies is evident in the fashion e-commerce business. We may consider that retailers use the returns policy as a tool to reduce consumer risk and increase consumer demand (Janakiraman, Syrdal, & Freling, 2015). Retailers use returns policy in different ways: pre-purchase, to signal a certain level of retailer or product quality (Bonifield et al., 2010, Mukhopadhyay and Setaputra, 2007), and post-purchase, to alter product evaluations (Kim & Wansink, 2012). Returns policies can have varying degrees of leniency; (Janakiraman et al. (2015) classify five returns policy leniency dimensions: time, money, effort, scope, and exchange.

In contrast, fashion returns are driven by subjective factors like sizing and style preferences, influenced by the fast-paced nature of trends and the rapid depreciation of inventory, which together create a highly time-sensitive returns management process (Blackburn et al., 2004). Unique consumer behaviours, such as ‘wardrobing’ (purchasing items with the intent of brief use before returning) and ‘bracketing’ (buying multiple sizes or styles with the intention to return those that don’t fit), are prevalent in fashion but rare in other sectors (Pei and Paswan, 2018; Whittaker-Wood, 2019). These behaviours contribute to a high volume and complexity of returns in fashion, unlike the more predictable, functionality-driven returns seen in other industries where returns are often functionality-driven, such as product malfunctions, compatibility issues, or feature limitations, that are generally easier to assess and manage within standardised return frameworks (Harris, 2008; Ülkü and Gürler, 2018)

(Anna-Marie Klütz.et.al.) Similar to free shipping (Shehu et al., 2020), free returns have become a standard practice in European fashion e-commerce markets over the last decade (e.g., Gelbrich et al., 2017). Such consumer-friendly return shipping policies are often used by retailers to lower consumers' perception of risk when purchasing products online and to strengthen the consumer-retailer relationship (e.g., Janakiraman et al., 2016; Rokonuzzaman et al., 2021). Compared to other return policy dimensions (e.g., scope, time), lenient monetary return policies such as free returns represent a key lever for retailers to increase consumer purchases (Janakiraman et al., 2016). However, free returns also raise the likelihood of product returns and are linked to a reduction in the average value of an order, as they encourage more frequent and smaller orders (e.g., Hjort and Lantz, 2016; Lantz and Hjort, 2013; Oghazi et al., 2018). This causes substantial handling costs for retailers, which can hurt their profitability (Frei et al., 2020), while also contributing to environmental harm through reverse logistics (Zhang et al., 2023). 

(Magano. et.al) Online commerce is prone to asymmetric information conflicts; because of their specific informational endowments buyers and sellers are differentially informed. Under this framework, the better-informed party (BIP) has the incentive to opportunistically exploit his/her informational advantage, either in the form of adverse selection or moral hazard behaviour. Under this framework, online shopping transactions are prone the unethical behaviour of both sellers and buyers. In an e-commerce buying transaction, a lesser informed party (LIP) may be faced with an adverse selection problem if they prefer to trade a good with specific attributes, but if the BIP does not disclose such information, the LIP may face a selection problem. Likewise, adverse selection problems can be, in general, mitigated by signalling BIP’s private information.

(M.M.Shanmugapriya . et.al) Particularly, inside the last segments of the 20th century with quick alterations inside the records era, PCs have turned into a key a piece of the life. With the propensities inside the records and verbal trade innovation over these years, portable workstation structure’s abilities have developed out of the blue and close-by systems have end up being a group that associates the majority of the PC frameworks in the global, the Internet. In the records innovation, the Internet has ended up being progressively indispensable. [6] 20th century has been an innovation that, social, budgetary and political changes have happened. This section starts with the literature review with the concept of the Return policies of electronic commerce, Apparel sector and continue with online purchasing behaviour of consumers. Alongside the globalism, vanish of the geographical boundaries, technological improvements and unavoidable passing to the actualities society has profoundly influenced and changed the contemporary controls of the monetary manager universal. Many Return policies of Ecommerce business are analysed. Consumer behaviour aspects are reflected with a reference to the distinguishing evidences of several attributes.


Research Methodology

This study adopts a mixed-methods design to apply bracketing behaviour in e-commerce fashion retail how it is used to examine the role of size uncertainty, profitability trade-offs, and return policy strategies.



Findings

  • The findings show that size uncertainty is a key driver of bracketing behaviour in e-commerce fashion retail. Due to the lack of physical trial, inconsistent sizing, and limited accuracy of size charts, consumers often purchase multiple sizes and return the ones that do not fit. This shifts decision-making from pre-purchase evaluation to post-purchase trial, making bracketing a rational response to uncertainty.


  • Bracketing has a dual impact on retailer profitability. It increases purchase likelihood and sales conversion, but also leads to higher return rates, resulting in increased logistics and handling costs. The overall effect on profitability depends on whether the additional revenue generated outweighs the costs associated with returns.


  • The study identifies key factors such as return costs, size uncertainty, return policy structure, and pricing strategy in determining whether bracketing should be encouraged or discouraged. Retailers may encourage bracketing when return costs are low and conversion benefits are high, but discourage it when return-related costs exceed the gains. Thus, a balanced approach is essential.


Conclusion

The study concludes that bracketing behaviour in e-commerce fashion retail is primarily driven by size uncertainty, making it a rational strategy adopted by consumers to reduce purchase risk. While bracketing enhances purchase confidence and increases sales conversion, it simultaneously creates significant challenges for retailers in the form of higher return rates and increased operational costs. The overall impact on profitability depends on the balance between additional sales gains and return-related expenses. Therefore, retailers should not aim to eliminate bracketing entirely but instead manage it strategically through well-designed pricing and return policies. By balancing customer convenience with cost efficiency, retailers can optimize profitability while addressing the challenges associated with bracketing behaviour.


References

https://www.researchgate.net/publication/358088408_Bracketing_of_purchases_to_manage_size_uncertainty_Should_online_retailers_be_worried

(https://www.sciencedirect.com/science/article/pii/S0148296316302272)

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