“Retailers’ Attempts To Dissuade Returns May Impact Brand Loyalty” by Alicia Thorpe via Retail Wire

“Retailers’ Attempts To Dissuade Returns May Impact Brand Loyalty” by Alicia Thorpe via Retail Wire

The tension between retailers and shoppers is growing, and it’s because of returns.

Shippo, a leading shipping platform for growing e-commerce businesses, has come out with a 2023 Benchmarks Report that “takes a comprehensive look at how mid-market e-commerce merchants are measuring up when it comes to key shipping and fulfillment data points.” One chapter in Shippo’s report focuses on the dilemma of e-commerce returns.

According to Shippo and a consumer survey conducted by The Harris Poll in June, “21% of Americans who have made online purchase returns in the past 12 months expect those returns to increase in the next 12 months.”

With the popularity of online shopping, consumers see returns as part of their regular e-commerce experience, which may explain why many shoppers are expecting to increase the number of items they return. At the same time, many brands are attempting to limit e-commerce returns. As the National Retail Federation stated, online return rates in 2022 accounted for “approximately $212 billion,” which is 16.5% of all online sales.

The rate of return retailers experience might vary based on what they sell. For instance, apparel typically sees the highest rates of returns, as indicated in a report by Shippo’s partner Loop. Accessories and footwear also experience high return rates.

But what’s different about these items in particular? For people buying products online, they have to try them on to make sure they fit as expected. Shoppers may also buy multiple sizes of the same product to decide what looks and fits best. This leads to potentially high return rates, but it’s an important part of the online shopping experience.

“Some estimates peg the cost of returns to the seller at 66% of the original item’s price,” Shippo stated in the report. And this cost, combined with the high return rates, has led some companies to believe that dissuading returns is the best solution in order to save money, but “that strategy may be a mistake.”

More and more shoppers are starting to notice that brands are making changes to their return policies, and they’re not happy about it.

According to the Shippo/Harris Poll survey, “Nearly three in four Americans who have made online purchase returns in the past 12 months (72%) have noticed retailers making online purchase returns more difficult over that time span, and more than half (54%) have felt blindsided by a retailer changing their online purchase return policy.”

Here are a few ways Shippo’s report notes that policies are changing:

  • Allowing exchanges or offering store credit only
  • Charging a fee to return products
  • Shrinking the return window
  • Allowing only in-person returns

Shoppers aren’t just noticing these policy changes, either — they’re speaking out and taking action. The survey states that “four out of five Americans (80%) say if an online retailer they regularly purchase from made their return policy more difficult, they would purchase from a different retailer with a more favorable return policy instead.”

“One bad return experience can result in complete consumer abandonment,” said Loop’s president, Aaron Schwartz. “Today’s economic and market uncertainty means consumers are paying close attention to retailers’ return policies and if brands aren’t considering the customer journey beyond the point of purchase, they’re missing out on critical opportunities to build trust and boost customer retention.”

It’s about brand loyalty in the end. Companies may think that losing out on money because of returns is a huge problem, but they might end up doing more damage to their reputation by making hasty changes.

Do you think retailers have a valid reason for attempting to dissuade returns in order to save costs? Or do you believe they should prioritize customer satisfaction and loyalty over minimizing returns? View how various retail experts answer this by clicking the following link and scrolling past the article:

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