Returns have always been costly for retailers. However, the pandemic surge in eCommerce created a flood of returns that quickly overwhelmed retailers. The rising costs of returns and the lack of space and staff to process them made retailers think twice about their standard of free returns. Today, nearly 80% of retailers charge for at least one return method1. While it has reduced the amount of returns, it has also cost retailers business. How can retailers reduce returns without damaging the customer experience?
The following are ways to shape how, why, when, and where consumers return items.
1. Provide More Detailed Information.
Consumers want a smooth, seamless, and informed buying process — which means the more information a brand can provide, the more informed the consumer can be. Design the customer experience to include as much information as possible, including user generated content (UGC), such as reviews, photos, videos, and Q&As, so that consumers can gather the data they need to make more confident and accurate buying decisions. When consumers can order accurately (for example, use a sizing chart to compare measurements to ensure they order the right size, and then having customer reviews that indicate sizing accuracy), it reduces the likelihood of returns. Nearly two-thirds of consumers say that UGC would make them less likely to return products2.
2. Shape the Return Policy So It Rewards the Behavior You Want.
Consumers want options. But retailers can craft their return policy so that it motivates consumers to choose the return method that is most preferred by the brand. Want to drive returns to in-store? Make in-store returns your only free option. By charging for the least-desirable (most costly) return method and providing cheaper or free returns for the desired process (least costly) for the brand, retailers can shape consumer behavior to preferred outcomes.
3. Make Free Returns a Members’ Perk.
Loyalty or reward membership programs are ideal places to offer free returns, especially for eCommerce brands that do not have stores. Consumers that value free returns will be incentivized to sign up or pay an annual membership fee, which can help offset the costs of returns. Some retailers are also placing free shipping within the perks of their membership programs.
4. Put Timeframes on the Acceptable Return Period (or Not).
Some retailers are shortening the return timeframe to 30 days, which encourages buyers to make return decisions within that timeframe and takes advantage of people’s tendency to procrastinate and miss the deadline. A study did find, however, that “no deadline” return policies actually reduce returns3 — likely because people are not pressed to make a decision and don’t get around to doing so.
5. Limit the Categories and Condition of Items That Can Be Returned.
Electronics, beauty products, and some furniture cannot be returned unless unopened and within very limited timeframes at most retailers. Limiting items that are costlier to process in returns or more difficult to resell can help reduce reverse logistics cost and deter returns.
6. Donate Returned Products to Charity.
Some retailers may find that donating returned items to charity, rather than processing them, is a wiser use of money. If so, retailers can inspire consumers to donate rather than return, and encourage recycling unwanted items within the economy.
7. Collect Data on Returns.
The more you can understand the reasons customers return products, the more you can adjust your processes to address those causes. Routinely ask customers for the reason for return and then pay attention to trends to identify areas to improve. This can also highlight potential fraud. While consumers prefer a “no ask” policy, requiring them to provide a reason can be highly beneficial to the retailer. Equally important is to regularly seek feedback from employees processing returns to help identify areas to automate, streamline, or improve.
Crafting a return policy to naturally hinder returns — even if the returns are free — will help reduce costs without damaging customer experience.
Learn how Radial can help you manage returns.