Returns are a hot topic at the moment. Consumers are being more considered with their money in the face of the cost of living crisis and return rates rising. Soaring expenses are eating away at retailers’ profit margins and recouping the cost of returns has moved up the agenda for businesses of all sizes, writes Laura Garrett, divisional marketing manager at ReBound.
Many retailers are making the difficult decision to charge for returns; in fact, 25% of the UK’s leading brands are now charging consumers for returns.
However, research into the subject is mixed. Some studies find that charging for returns doesn’t significantly damage customer loyalty, especially if the return is done sustainably. On the contrary, other surveys show that the impact of charging for returns can be detrimental.
While there is no one right way to manage returns, continuing to offer them for free might not be an option for some retailers. However, the choice is not binary. It’s important that retailers understand the value of returns when it comes to customer retention, particularly in the current climate. The good news is that there are a number of customer-friendly alternatives for retailers to consider that also reduce the financial burden of returns:
Deduct from refund
Retailers can simplify the process of charging for returns and paying out refunds by deducting the cost of the return from the customer’s refund. ReBound’s research found that when returns are not free, consumers would rather have the cost of the return deducted from their refund than make an additional transaction for return shipping. This also gives retailers an element of flexibility in how much they charge for the return. For example, rather than charging the carrier flat shipping rate, they could simply deduct £2 from the consumer’s refund. This affords retailers the flexibility of being able to decide how much of the return cost they would like to offset.
Some retailers now offer special offers and rewards like free delivery to customers who pay an annual subscription. As part of the membership, they could also include free returns. This could reduce the overall costs for both retailers and their customers, especially the ‘returning returners’ who make regular orders and returns.
First few free
The final alternative is to offer each customer a certain number of returns free per year, and if they go beyond that number, they pay. While this doesn’t completely eliminate the cost of returns to the retailer, it would minimise excessive costs caused by returning returners who buy and return multiple packages a week.
With inflation on the rise and an ongoing cost of living crisis, it’s becoming harder and harder for retailers to retain their customers. If retailers want to remain competitive in a tough economic climate, they need to enhance customer experience, and returns are a key element of this strategy. Customers really value this part of the shopping experience, and it could be the difference between them shopping with a retailer again or going to their competitor. But soaring costs aren’t just affecting consumers, they’re impacting retailers too, and it’s not always feasible to offer free returns for every parcel. It’s important to find a solution that works for everyone and considering these alternatives might be the answer.
Laura Garrett, divisional marketing manager, ReBound