Blogs, Returns Strategy, Sustainability
3 Customer-Friendly Alternatives to Offering Free Returns
A question that we are frequently asked by our clients is, “Should we begin charging for returns?”
As this topic has become more and more popular, brands are beginning to question their current practices. Although offering free returns has been the standard, with rising transportation and labor costs, many brands are trying to decide if they can begin charging for returns without creating a major dent in the customer experience. Despite the many surveys that have been conducted around this topic, there doesn’t seem to be a consensus. Some studies find that charging for returns doesn’t significantly damage customer loyalty, especially if the return is done sustainably. However, other surveys show that the impacts of charging for returns can be detrimental. We believe that the mixed information on this and lack of a clear answer is due to the differences in consumer preferences. Depending on the brand, consumers will have very different behavioral patterns and values, so there’s no way to know for sure how your consumers will react to paid returns especially if they’re used to free returns. For this reason, we prefer to stay away from drawing any industry-wide conclusions here. Brands know their consumers best and must decide for themselves if charging for returns is the right step.
However, there are many alternatives to charging for all returns or offering completely free returns, and many of these options allow the financial burden to be shared between consumers and brands. Below, we’ll outline three possibilities that might be a better choice than going all or nothing when it comes to return costs.
1. Subsidized returns
With this option, the cost of returns is shared between the consumer and the brand. For example, a small flat fee could be introduced, with both parties splitting the cost. This option allows brands to reduce the financial burden of returns while still offering a degree of convenience to customers.
One potential downside of subsidized returns is that they can be perceived as unfair by some customers. For example, if a customer purchases an item that turns out to be defective, they may feel that it’s unfair to be charged a return fee for a product that wasn’t their fault. However, if the return fee is communicated clearly upfront, customers are more likely to understand and accept the charge.
2. Deduct from refund
Instead of having a separate transaction where the consumer has to make an additional payment for the return, the return costs are deducted from the refund. This option can simplify the return process for consumers, while still allowing the brand to recoup some of the costs.
One benefit of this approach is that it can enhance the customer experience, as consumers don’t need to make a separate payment, making it feel like less of a burden. Furthermore, it can reduce the likelihood of customers abandoning their carts due to the perceived inconvenience of paying for returns. On the other hand, this approach may not work as well for lower-priced items where the cost of return shipping is more significant relative to the item’s cost.
3. Loyalty programs
Brands can introduce free or paid loyalty programs depending on the preferences of their consumers and the brand’s strategy. Some might offer programs where consumers are charged a monthly fee in exchange for premium service like free shipping or free returns, while others might provide certain perks for free to registered customers who generate points by buying products regularly. Implementing loyalty programs allows brands to offer free returns to consumers who are loyal to their brand, while still generating revenue either from the loyalty program fees or just by the continuous revenue generated by loyal customers.
Loyalty programs can be an effective way to incentivize repeat purchases, however, it’s essential to ensure that the program is well-designed and offers enough value to customers. A potential downside of (paid) loyalty programs is that they can be perceived as exclusionary by customers who don’t want to pay a fee for access to benefits they perceive as basic necessities. For this reason, it’s important to make sure that the program’s benefits are genuinely valuable to customers and not just window dressing.
Ultimately, the decision to charge for returns or offer them for free depends on the brand and its consumers. While there is no one-size-fits-all solution, exploring these alternatives can help brands find a solution that works for them and their customers.
For brands that are considering charging for returns, it’s essential to communicate the decision clearly to customers. By explaining the reasoning behind the decision and providing clear information about the return process, brands can help to reduce confusion and ensure that customers feel like they’re getting a fair deal.
Other alternatives to decrease costs
It’s also essential to keep in mind that charging for returns is not the only way to reduce return costs. By improving product descriptions, using high-quality images, and providing accurate sizing information, brands can help customers make more informed purchasing decisions and reduce the likelihood of returns. Learn more about the hidden costs of returns and how you can reduce them in this blog.
As a returns management company, we can help you navigate these decisions and orchestrate a solution that balances the needs of your business and customer preferences. We can support you in implementing free or paid returns, as well as all of the in-between options listed above. If you’re interested in learning more about these options, reach out to us. We’re here to help you find the best way forward.