Online Returns: The Missing Piece of the Digital Commerce Experience

With 75% of Americans now shopping online, accounting for almost $600 billion in retail revenue, lots of online shopping means one often dreaded reality: lots of returns. Retailers view returns as a necessary evil, and it’s understandable why. But with 85% of shoppers saying they will not do repeat business with a company if its returns process is complicated or inconvenient, online sellers must develop returns experiences that are frictionless for consumers yet have minimal impact on their bottom line.

Today, online retailers face three options: Invest in a generous returns policy that is attractive to customers; use reverse logistics partners to keep up but forego a portion of sales proceeds; or continue with the status quo and risk losing valuable customers.

Online purchasers look for return policies that are flexible, transparent and simple, often including free shipping, easy packaging and no restocking fees. Retailers can reap rewards from such policies, fostering brand loyalty and incremental sales, as 96% of shoppers said they would patronize such retailers. In addition, 62% of digital buyers surveyed also said they chose to purchase something to replace what they were returning.

Digitally native brands like Away, Casper and Birdies have set the standard for online returns. The luggage company Away gives customers a 100-day trial window, and free shipping and returns are included with every order. Casper offers the same policy and donates returned mattresses to charity to reduce waste and demonstrate its sustainability. Birdies, a women’s shoe brand, offers free shipping and returns or exchanges within a 30-day window. Return policies like these align with the preferences of consumers shopping brands without a major physical presence, removing some initial purchase barriers and increasing the likelihood of future purchases.

However, online returns can be especially costly to retailers, averaging about $10 per transaction. This cost is compounded by the large number of digital shoppers who “bracket,” buying multiple versions of one item (for example, in different sizes or colors), choosing a favorite, and returning the rest. But it’s not just the return shipping and handling costs that retailers shoulder. Forrester found that almost half of online returns have little to no salvage value, making the sale an overall loss for the retailer.

To help manage their returns, many retailers are partnering with reverse logistics firms like ShopRunner, a members-only service providing unlimited free, 2-day shipping and returns across its network of 140+ retailers. By partnering with ShopRunner, retailers from AutoZone to Neiman Marcus are able to offer a standardized return policy and experience, as well as have access to ShopRunner’s valuable database of 10 million members. This outsourcing comes with a tradeoff, though, as ShopRunner takes a cut from sales generated through its partnerships.

However retailers choose to accomplish it, the benefits of a great returns experience can far outweigh the costs. Providing digital shoppers with the easy and accessible returns process they expect can turn first-time buyers into lifelong customers.

Contributed by: Berkley Pitt, Account Executive, and Marie Burns, Senior Director Integrated Commerce, Integer Dallas

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