Final answer:
A retailer might offer a more flexible return policy to compensate for the inability of customers to inspect products in non-retail sales channels. This helps mitigate imperfect information, signals product quality, and builds brand reputation, encouraging consumers to make purchases.
Step-by-step explanation:
A retailer may allow for a more flexible return policy to manage the issue of imperfect information, which is particularly prevalent when customers are unable to physically inspect products as in the case of online shopping or mail-order catalogs. By offering a money-back guarantee, a retailer signals a promise of quality and builds a reputation for reliability, thereby encouraging purchases from hesitant consumers. For instance, L.L. Bean, which primarily conducts sales through non-retail channels like mail, telephone, or their website, leverages a robust return policy combined with a strong brand reputation for quality to thrive despite the imperfect information scenario faced by their customers.