If you want your e-commerce business to be successful, there has to be such a thing as free returns

16th April 2019

There’s no such thing as a free lunch……..

……but increasingly, if you want your e-commerce business to be successful, there has to be such a thing as free returns.

In fact, according to new research by Klarna, a Swedish bank specialising in online payment solutions, if a shopper has a poor returns experience, they are highly unlikely to shop with that brand again.

There’s no doubt that an easy and free returns service is high on the wish lists of today’s online shoppers.  It’s the number two reason influencing online sales, after free delivery. Perhaps understandably, return rates for items bought online are twice that of goods purchased in-store.   And clothing represents the largest percentage of goods returned, followed by consumer electronics.   
 
A significant percentage of returns is due to shoppers ordering multiple items with the pre-intention to return some of them.  Data from a Narvar survey run in the US in 2018 revealed that 41% of shoppers indulge in ‘bracketing’ – that is ordering multiple items for choice and returning those not wanted. This is particularly predominant in the clothing market, and Narvar suggests that retailers can mitigate this habit by providing more detailed information on fit and colour before purchase.  

Other return reasons include damage caused during the handling or transportation process – this reason doubled between 2015 and 2017 - or, for 27% of shoppers,  disappointment with the item.

So are free returns just another margin sapping practice that retailers have to grin and bear?

Even though returns are thought to cost UK retailers £60 billion a year, the answer is ‘not necessarily’. Efficiently managed, slick and free returns service can improve business growth.  And conversely, organisations who are not prioritising the returns process risk losing sales and loyalty.

The Klarna research shows that 78% of shoppers will buy more in the long-run if a retailer has free returns.  High-end shoe retailer Zappo find that those customers who return the most, spend the most. So companies have to get smarter about their returns process, to minimise the cost to themselves and maximise the benefit to the client. 
 
To lessen damage or loss levels, a good logistics company is essential, as is correct packaging design.  To give customers confidence that they are making the right choice, many retailers are turning to augmented and virtual reality.  If someone can ‘virtually’ try on an item before purchase, then bracketing becomes less of an issue.   And good use of online reviews and customer feedback on returns will help to weed out problem lines. 
  
How to ensure your returns service leaves your customers wanting more

Treat returns as a crucial part of the customer journey.  Returns are an essential element of the online shopping experience.  Provide a pain-free process and be clear about your policies.

Offer options. Many shoppers – over 40% of then - like a ‘return to store’ choice which is obviously easier and cheaper to set up.  But for those who want to return by post, ensure the process is just as easy with immediate refunds and exchange options.

Keep communications open. Informed customers are happy customers – let them know where their return is in the process and when their refund can be expected.

In summary, it’s all about context.  Rather than considering returns as a massive headache, treat them as one of the costs of the supply chain.  By doing that, you’ll find that you naturally focus on efficiencies.