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How Important Are Return Policies to Your Customers?

How Important Are Return Policies to Your Customers?

Originally posted in January 2018. Updated in October 2021.

Key Takeaways:

– Online shopping is highly prevalent and returns are common for online purchases.

– Many retailers fear that a generous return policy will be abused by customers.

– More than half of all shoppers won’t do business when they feel the return policy is too strict.

– Factors such as product type and time of year can impact the expected frequency of returns.

It’s no exaggeration to say everyone shops online. Big Commerce puts the number of American e-commerce shoppers at 96%; that’s more than 310 million people. The National Retail Federation has found that 15 to 30 percent of those purchases are going to be returned. That means your online store’s return policies are very important.

Retailers are often very concerned that customers will take advantage of generous return policies. However, eMarketer reports that half of all shoppers won’t do business when they feel the return policies are too strict. The majority of shoppers prefer receiving a full refund, rather than exchanging an item or receiving store credit. Additionally, online shoppers don’t want to pay the shipping costs to return an item they don’t want or aren’t pleased with. Customers want to be able to return items without receipts, tags, or original packing materials, and more than one in ten shoppers would prefer to buy items online and return them to a nearby brick and mortar location.

Studies have shown that generous return policies increase sales without increasing the volume of returns.

– Red STag Fulfillment

“2020 is set to be the worst year on record for retailers with regards to return percentages. Every retailer is set to see returns that are 50% to 100% more than they have ever encountered in the past.”

LateShipment.com‘s Sridhar to Retail Dive

How Common are Returns?

Return frequency varies widely based on what you sell and when you’re selling it, so it can be hard to nail down a firm return percentage. For example, the clothing industry sees frequent returns year-round, especially when fitting rooms in brick-and-mortar stores were shut down, because customers buy multiple sizes to see what works and send back what doesn’t. Unfortunately, new customers can’t be certain about which sizes, features, or even products are the best fit for their needs, so returns are par for the course when it comes to online shopping. A generous return policy makes it easier for your customers to buy with the peace of mind that they won’t get stuck with something they can’t use.

You also have to consider when customers are buying from you the most because there’s a likelihood that purchases and returns will follow proportional trends. This is especially true around gift-giving seasons when customers may not only be buying for themselves but also for friends and family members whose sizes or preferences come with question marks.

How to Set Your Return Policy

As a business owner, determining what your return policies are going to require balancing the need to protect your business with customer preferences. It’s a good best practice to review your returns policy on an annual basis, to make sure its provisions are still appropriate for your business. Once you’re clear about what your policies are, you want to make sure they’re easy to find on your website and on any other sales channels, including social media. Analytics show us that this information is among the most-accessed content on any e-commerce site. If there are aspects of your return policy that are a competitive advantage, such as buy online and return in-store, make sure you promote this fact throughout your messaging: it can provide the final nudge that moves your customer from interest to action.

Your eCommerce return rate can go up by as much as 50% above normal after the holidays.

– The Star via Red Stag Fulfillment

Create a 5-Star Retail Experience for Your Customers

Your return policy, your product descriptions, the packaging you use… they all come together to create your brand’s retail experience. Get your A-game together with the help of these retail training sessions, or work with a Marketing Mentor to brainstorm improvements one-on-one with an expert.

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