The High Price of Returns

Okay, let’s be real—nobody likes returns. But nonetheless, as consumers and retailers, we all have to deal with them whether we like it or not. No matter how you slice it, returns are one giant hassle, but beyond just that, they can also be extremely expensive for businesses that don’t take precautions to mitigate financial risks.

Below, we discuss a few factors that can play into the high price of returns, and offer advice for how to avoid these pitfalls and save some moolah on your bottom line.

Pre-Printed Return Labels

It can cost anywhere between $0.25 and $0.40 to pre-print return labels. And remember, that’s the cost of printing per label. Just think about how many online orders you send out on a weekly or monthly basis!

As you can imagine, these numbers have the potential to really add up, especially when you take into account that the return labels you’re pre-printing a) won’t always be used, and b) will sometimes (okay, a lot of the time) need to be replaced...which means the retailer has to shell out even more money for even more printed labels.

How do you keep return label costs under control? By allowing customers to print their own labels, you can ensure that the vast majority will actually get used instead of ignored, tossed away, or misplaced. And along with saving a ton on printing, letting the customer initiate the returns process online can also give you a heads up about who’s sending what back.

Out-of-Commission Merchandise

Let’s say a customer goes online and orders one of those Santa-riding-a-dino numbers for an ugly sweater party. It’s two weeks before Christmas, but when the sweater arrives, it doesn’t fit the customer. He ships it back and orders a completely different sweater in a bigger size.

This ends up being problematic for a few reasons. First of all, if you don’t realize the merchandise is heading back your way or why it’s coming back, you can’t intelligently plan for the logistics of its return. Secondly, since the merchandise is seasonal, you won’t be able to resell this merchandise at the original price point. Bummer.

There are ways to prevent these costs from taking too heavy a toll, however. With an online returns initiation process, you’ll be able to see upfront what is coming back and route its return journey in a way that makes the most sense. An online initiation process can also help you detect and fix undesirable product description trends—such as inaccurate sizing—in order to prevent returns for similar reasons down the road.

Customer Support

“Can I exchange this for something else?” “Do I have to pay for return shipping?” “Did you receive my return?” “When will I get my refund?”

For every return, there are one hundred and one questions that can get asked. And for every question that actually does get asked, you must provide an answer—or pay the price of losing your customer’s loyalty. But customer support can be costly as well, and the more questions that need to be answered, the higher those costs can get.

Call centers and customer service reps may just be part and parcel of working with people, but it is possible to minimize the calls and emails that pour in so that you can re-focus resources on more important matters. First of all, make sure your returns policy is easy to find and understand. Surprises might make great birthday parties, but no one likes them when it comes to returns. Offer customers a simple way to track packages as they make their way back to you, and give buyers the option to return unwanted items to a physical location. Another way to avoid customer care interactions is by showing customers upfront what their expected refund will be, and when they can expect to see that money back in their wallets.

Unhappy Customers

It costs five times as much to acquire a new customer as it does to keep one that you already have. In other words, losing current customers as a result of totally avoidable issues can get very expensive very fast.

An easy, seamless returns experience can surprise and delight jaded customers (and unjaded ones, too). By offering a frictionless journey all the way through to the very end, you’ll encourage buyers used to painful returns to shop with you over and over again. They’ll know, after all, that their purchases from you won’t put them at risk for an ugly or undesirable experience should something not work out. And at the end of the day, happy, loyal customers are your greatest asset.

Yes, returns can sometimes be a big pain in the neck. But that doesn’t mean they have to cost retailers an arm and leg or cost consumers a positive post-purchase journey. By keeping these remedies to common returns costs in mind, you’ll put yourself on the path to more financial success and all-around better customer experiences. And when it comes to returns, that’s excellent news for parties on both sides of the transaction.

Want to learn even more about how to create a better returns experience for your customers? Check out this handy cheat sheet with our top seven tips.

Be sure to read our all-about-returns ebook, The Essential Guide to Retail Returns, to find out what we've learned about current trends and consumer expectations.