Product Customization and Returns: The Moderating Role of National Culture

Abstract

Product customization enables consumers to tailor products to their individual preferences. One benefit of customization is its lower volume of returns. By customizing, consumers learn about their product preferences and develop a sense of attachment to the products they help “create.” As a result, they are less likely to return the purchased items. The effect of product customization on returns may depend on cultural traits of consumers, such as the extent to which they would avoid uncertainty or the degree to which they would feel “subordinate” to authority. Hence, this article studies how national culture moderates the negative relationship between customization and returns. Our investigation analyzes a unique dataset from a leading global luxury brand manufacturer that offers both standard and customized versions of a product across more than 20 countries. We find that the disparity in return rates between standard (higher rate) and customized products (lower rate) depends on the cultural dimensions originally introduced by Hofstede. This gap widens with masculinity and uncertainty avoidance but narrows with power distance and individualism. Therefore, multinational firms should weigh these aspects of national cultures when designing both customization and return policies.

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