It's the same reason you see companies advertising risk-free money-back guarantees: Buying something feels less risky if you believe you have recourse if it do

It's the same reason you see companies advertising risk-free money-back guarantees: Buying something feels less risky if you believe you have recourse if it doesn't work out. Practically speaking, if a company can raise sales by 20% with a liberal return policy but 5% of purchases are actually returned, they may still come out ahead. Long-term, having a return policy also signals that the company is interested in taking care of the customer and building a relationship. This is why you see brands like REI building a reputation on top of their generous return policy. People (on average, not everyone of course) will actually pay a small premium to shop from a company with a return policy.