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The state of returns in 2021: insights from Klarna's latest research report.

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It’s time we talked about returns.

The achilles heel of retail? Or it’s hidden strength? In the light of the pandemic and huge shifts in shopper habits, at Klarna we decided it was time to uncover the state of returns. We surveyed 2,000 consumers across the UK with Censuswide in March 2021, and found that over eight in ten (84%) online shoppers would turn their back on a retailer after a bad returns experience.

 

Combined with additional data analysis of Klarna payment trends, our latest report establishes the power of returns as a customer acquisition and retention tool for retailers, and the repercussions of getting them wrong. With 39% of consumers* doing more shopping online since the pandemic, an increased reliance on returns means people’s patience is waning when it comes to clunky or costly returns processes. 83% of online shoppers** admit to getting frustrated by retailers who have an inefficient returns process, whilst 82% agree that retailers in general need to improve their returns capabilities.

 

Nice-to-have, to non-negotiable.

“A return or exchange is better than no transaction in the first place." - Natalie Berg, Retail Analyst and Founder of NBK Retail

 

Our research uncovered a consistent trend of rising consumer expectations when it comes to returns services. Compared to 2019, a greater number of online shoppers now believe that returns are a normal part of online shopping today (80%, up from 77%) and expect that every retailer they shop with offers free returns as a minimum standard of service (81%, up from 75%).

 

Demonstrating the need for retailers to keep up with consumers’ changing needs, some of Brits’ biggest frustrations with returns stem from the inconvenience of slow, out of date or inflexible returns processes. Over a third (36%)** cited slow refund processes as the most frustrating element of returning items bought online, highlighting the importance of flexible payment options.

 

Emerging trends as a result of frustrations with the returns process.

Exacerbated by COVID, these frustrations with the returns process are the driving force behind emerging shopping trends, as people find ways to avoid inconveniences. Over the past 12 months, a fifth (21%) of online shoppers say they have reluctantly kept an item they were unhappy with because it was too much effort to return it, 12% have avoided returning items at the post office because it’s difficult to social distance, while 11% have gifted and 9% have resold items they don’t want instead of returning to the retailer. In the long run, this could mean people avoid buying again from retailers that don’t meet their needs.

 

The return of returns, and looking to the future.

For those retailers that get returns right, this can serve as a competitive advantage, helping to attract new customers, and boost customer loyalty. 84% of online shoppers agree they’re more likely to buy from and 86% are more likely to come back to online merchants who offer free returns. However, even a little added inconvenience can come at a cost: over two thirds (70%) of online shoppers state that if a preferred retailer stopped offering free returns, they might not shop with them.

 

Natalie Berg, Retail Analyst and Founder of NBK Retail:

“The pandemic has thrust the issue of returns into the spotlight, exacerbating the disconnect between the effortlessness of placing an online order and the inconsistent and often friction-filled experience of making a return. Returns are fantastically out of sync with an otherwise seamless e-commerce experience.

 

“As we reimagine retail for a post-COVID world, retailers must accept that returns are part and parcel of 21st century shopping and, if managed well, can encourage conversion and drive loyalty among their most valuable shoppers. Retailers can no longer afford to ignore the post-purchase experience.”

 

Download the full report from Klarna here.

NOTES:

* consumers that shop online

** consumers that shop online and return items

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