Retail Return Policies: Eliminating Unnecessary Costs

Mike Abelson
Mike Abelson
Guest Contributor

Customer-centric return shipping practices can help you earn and keep more customers, but often at a tremendous cost, so a well-thought out policy is helpful to protect against return fraud and abuse.

Having a clear return policy in place is good for your business. Research shows that 27 percent of consumers are willing to make a significant purchase from a store that offers free return shipping.

Unfortunately, returning products has become a bad habit of so many consumers. While most people would return an item because it isn’t in good condition when it arrived at their homes or the product does not match the description on the retailer’s website, more and more online shoppers do it intentionally.

For instance, they order several pairs of shoes without really intending to buy all of them. In the comfort of their homes, they try them on like they would at a regular store. After choosing the best pair, they return the others. Just like that, as if what they did didn’t cost the seller anything at all.

This is called “bracketing.”

While abusive returners only comprise less than 1 percent of customers, they still cost retailers a whopping $1,254 in profits, on average. In 2017 alone, the National Retail Federation (NRF) reported that the estimated cost of return fraud and abuse in the U.S. was $22.8 billion.

That hurts, right?

So, what is the best way to deal with bracketing?

Start by Writing a Clear, Concise Return Policy

Make your return policy easily accessible to your shoppers. It should be brief, on point, and easily understood. It should answer questions like how long they have to make a return or exchange, how to send an item back, what items are unreturnable, who pays for shipping, etc.

Set a Price Limit for Product Returns

A great way to protect your business against bracketing is to offer free return shipping only for purchases over a certain value. Additionally, require them to return the item unused, in its original packaging, and with the tag price still attached. This helps avoid “wardrobing” – a return fraud experienced by 40 percent of retailers wherein the customer has used the item prior to returning it.

Ensure Product Images Match Descriptions

Consumers aren’t the only ones to blame for the increasing return rates in online shopping. One of the top reasons why consumers return items to retailers is that the product doesn’t look as described in the description or seen in the photo. Many B2C companies still fall short in terms of product photography. While great photos can attract potential customers, you should make sure that what you show to your customers really matches with the product you are selling.

Consider Launching a Physical Store

Many successful businesses that have started online eventually built their brick-and-mortar stores with the help of business financing. The reason why many consumers prefer online shopping is that traditional shopping has become unsatisfying. If you have a growing online retail business, you should consider putting up your physical store where customers can freely inspect and try on products without the risk of returning them.

Utilize Your Reward Program to Counter Returns

Loyalty programs can help encourage customers to keep their purchased products, especially if you give rewards based on their dollar spent rather than the number of times they purchased. Make your loyalty program more attractive by giving more perks (for example, a free item at a certain purchase amount). This might be enough for a customer who isn’t completely sure about a product to just keep the item instead of returning it.

Free return shipping is a good practice that can help you earn more customers. But it is a double-edged sword. To protect your business against return fraud and abuse, make sure to follow this guide.

About the writer: Mike Abelson has been the head of Digital Marketing Department at Lendza for almost 3 years. Before starting his work at Lendza, he helped a lot of entrepreneurs and startups to succeed through various marketing strategies and tactics. Previously, he partnered with CEOs and executives to grow their businesses, building audiences and getting more clients.

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