The Great Retail Conundrum: Easy Returns Are Costly, but Drive eCommerce Loyalty

As eCommerce has accelerated over the past 18 months, so too have the number of returns retailers are seeing, with consumers ordering multiple sizes to use their home as a dressing room or trying new brands to test out during the pandemic.

David Morin, senior director of retail and client strategy at Narvar, told PYMNTS that with this increase in returns, “it’s really critical for retailers to think about how to make the overall experience as easy as possible, as frictionless as possible, as seamless as possible.”

“Because so many more people are trying new brands, they’re also likely going to try more returns experiences, and having that really seamless experience builds that trust and peace of mind,” Morin said.

It’s also critical that retailers include as much information as possible upfront, especially about sizing, and are open to the fact that some consumers still need to try things on their own. “Giving them that peace of mind to try without risk is what is going to build long-term loyalty and satisfaction over time,” Morin noted.

PYMNTS data show that 63% of consumers have or would return purchases either by mail or to a store location, and nearly 58% have or would make returns using printable shipping labels for free.

See also: New Data: More Than 40% of US Consumers Shop Through Digital Channels … and Stay There 

And even though over 43% of consumers say that free online returns are an important feature for merchants to offer, Narvar found that 45% of omnichannel retailers and 22% of direct-to-consumer (D2C) companies charge customers for shipping costs.

What surprised Morin, though, was the small number of retailers offering “modern and convenient return methods,” such as creating a QR code, a network of drop-off locations or the ability to schedule pickups. “What we found over the years is that making returns easier for consumers is what is going to win satisfaction and loyalty … and we believe very strongly that one of the ways you can make returns easier is to give people more convenient methods,” he added.

Personalizing the Experience

At the same time, retailers need to be wary about preventing fraud and protecting revenue, which may mean limiting the number of returns a customer is able to make. While Morin said he wouldn’t recommend putting out explicit statements about how many returns are allowed, “it’s really logical and makes sense for a retailer that wants to protect themselves.”

NET-A-PORTER and Saks Fifth Avenue are among the retailers with policies listed on their websites that warn customers of possible penalties for abusing their return systems. Neither specifies what the exact limit is — Morin said it likely depends on purchase history — but NET-A-PORTER, for example, says that continued returns “may, at our discretion, lead to the closure of your … account or future orders being refused.”

“It’s all about looking at the value of the customer,” Morin said. He added that brands can also keep track of why customers are making returns and find ways to personalize the shopping experience if, say, they are regularly buying the wrong size.

“We’ve always thought of personalization as being core to acquisition. … I think this is just a natural extension of the overall digital and eCommerce experience,” Morin explained. “It’s how you create a program or process for returns that are tailored to a customer’s preferences and needs, and also a customer segment or type.”

Saks Fifth Avenue, for instance, offers free shipping within a short window of time and then a small return fee after that window expires, incentivizing customers to make faster returns and allowing them time to try on clothes with little risk while still giving room to those who need more time to decide.

Morin noted that other retailers directly prompt customers trying to make returns through a digital portal to consider making an exchange instead, either for a different size or a store credit, which can protect some of the revenue typically lost through returns. One of Narvar’s clients has found that 30% of customers looking to make a return end up making an exchange when offered the option.

“I think going forward, we’ll continue to see more retailers having more dynamic or personalized return policies that incentivize behavior to either return quick, return somewhere else, get goods back faster or incentivize their most loyal customers,” Morin predicted.