Free Returns or Free Shipping?—The Dilemma of Furniture Retail

Most furniture is big, heavy, and almost impossible to fit in anything that resembles standard packaging. All of which is to say offering “free shipping” or “ free returns” seems like a questionable idea for furniture retailers looking to stay profitable. However, failing to offer shoppers at least one of these freebies is risky—it could mean missing out on sales to your competitors.  

So, what’s a furniture retailer like you to do?

Well, you need to start by taking a serious look at what “free” means for your future growth, because it could be the best investment you ever make.  

The case for free returns in furniture retail

Furniture shoppers want a smooth, seamless returns process, and that almost always means “free” too. The downside for furniture retailers like you is that the return costs for your products are high, with packaging playing a significant role (more on that later).

The key, then, is to think about the return on investment for offering free returns instead of dwelling on the upfront costs.

• Do free returns lead to more repeat sales and growing customer lifetime value? 
• Does offering free returns allow your customer service team to focus on other crucial areas of the business?
• Do free returns lead to more positive reviews and customer referrals, both of which contribute to higher net-new sales? 

How you answer those questions will determine whether offering free returns makes sense. As you weigh your answers, consider these numbers…

According to a roundup of studies on returns:

• Free return shipping can increase long-term profits by 25%
• 80% of shoppers say return policies impact either current or future sales
• 66% of shoppers read returns policies ahead of a purchase
• Hassle-free returns can boost repeat shoppers by up to 75%
• 55% of shoppers view restocking fees as a reason not to buy from you

When free shipping makes sense in furniture retail

Free shipping is an offer every business owner knows because it works—88% of shoppers will always choose an option with free shipping. In other words, offering people free shipping is correlated with increased order volumes, higher average order values, and a general boost to conversion.

For furniture retailers, the real question with free shipping is: “At what level does this make sense?”

Put another way, at what product price point do the costs of free shipping make financial sense to your business? This isn’t an easy question to answer. If free shipping facilitates a 5% increase in online sales, you need to figure out if that’s enough additional revenue is enough to offset the expense. 

Now, because the average order value is usually high in the furniture retail business, offering shoppers free shipping is doable. Especially if your company partners with a third-party logistics provider (3PL) to optimize flat-pack packaging based on DIM weight (and other factors) to drive down fulfillment costs. 

(Sound too good to be true?—Then look at your competitors. See how often they advertise free shipping. If their customers look like your customers (i.e., same shopper profile), it’s a good bet that your competitors are seeing growth in total order volume by sacrificing a small amount of per-sale margin.)

A quick note on affordability

If you’re a furniture seller (especially in the flat-pack world), affordability is always on your mind—what will a free return (or free shipping) offer cost, and when does a “free” offer transition from an asset to a liability? 

The fact is, shipping costs for furniture scale quickly. Trying to get a customer to disassemble their furniture safely, put it back in the original box (with all the padding and cushioning), and returning that box safely to your warehouse or store feels like an exercise in futility. Take that into account when you’re thinking about returns and affordability. 

A few other considerations you need to make…

• What’s the TOTAL cost of a return (including shipping, QA, testing, repackaging, restocking, etc.)?
• Can you strengthen padding and in-fill for returns protection (or use larger, sturdier packaging) for increased protection without increased costs, if you’re paying based on DIM weight?
• Can you increase the cost of your items to cover a free shipping or return offer?
• Have you asked customers what they prefer? Shipping or returns?

And don’t forget to consider packaging in all of this. Anything you do to reduce shipping costs (e.g., slimming down packaging weight) must not prevent customers from reusing your packaging for the  return process. Doing so will help you provide more reliable estimates and better control costs by reducing the number of customer service requests you receive from people who need a new box or can’t play packaging Tetris as well as your warehouse staff. 

Do you need to choose “either-or”?

Many online furniture retailers approach “free” offers as an either-or situation. They feel like they can afford either free returns or free shipping, but not both, because the costs are too difficult to absorb. 

Do not get sucked into this trap—challenge yourself to offer both free returns and free shipping as a way to jumpstart customer demand and fuel new sales. More often than not, seeing “Free shipping, free returns” is the straw that breaks the tentative shopper’s back, compelling them to finally click “buy.” 

And if you must pick one or the other?—Well, examine your ideal customer profile, think about which option they’d prefer, and move forward accordingly.