Why Are Brands Starting to Charge for Returns?

From Claire Tassin, retail and e-commerce analyst at Morning Consult:

‍“Apparel is where I see a large portion of brands who are having to start charging for returns. A lot of what we return never gets resold. It either goes into a discount environment or gets tossed—it doesn’t always make it back to the retailer in time to be on the sales floor…When you’re talking fast fashion, there’s a strong chance they’re not going to be able to resell that item. That also has to play into the economics of when it makes sense to charge customers or when it doesn’t.”

As the above quote suggests, requiring ecommerce shoppers to kick-in cash for their returns is becoming more common. 

And why not?—As supply chain disruption and inventory limitations increase the cost of doing business, it only makes sense for retailers to pass “the cost of doing business” onto their patrons. 

Besides, if consumers are willing to spend $4 to get a $6 bagel delivered to their door, shouldn’t they be willing to spend $4 to return a $45 sweater?

Yes and no.

Of course consumers don’t want to fork over their hard-earned money just for the sake of it. But they don’t mind “footing the bill” for premium services they view as luxuries.

Therefore, the onus is on retailers and ecommerce vendors to present their returns offering (e.g., next-day, at-home pickup) as a seamless experience that’s BIG on customer convenience. Doing this makes it easier for vendors to offset some of the costs of processing returns, and easier for shoppers to swallow the bitter pill of a returns fee. 

(Read more about retail returns optimization in How to Optimize Reverse Logistics.)

5 ways retailers can deliver a more convenient returns experience

When consumers encounter retailers that don’t offer complete convenience, their loyalty wanes.  

In fact, approximately 1 out of every 2 shoppers who experience difficulty processing a return will not buy from that retailer ever again. 

(It is also worth mentioning that the more convenient it is to make a return, the faster consumers are to submit one—and the faster returns are submitted, the quicker retailers can recover value through resale.)

‍Go boxless and labelless

Promoting boxless and labelless returns saves customers the trouble of re-packing items for shipment. That not only encourages customers to submit their returns in less time, but it helps the planet too. 

‍Personalize the processes

Deploy different return rules and workflows for different customer segments (e.g., VIPs, first-time buyers, etc.) or product categories. Doing so maximizes convenience for the highest-value shoppers and can be used to incentivise faster returns at the same time.

‍Offer returns online and off

Convenience means different things to different people, so provide customers with multiple return options. Online shoppers should be able to return at brick-and-mortar stores, in-person shoppers should be able to get their returns picked up from home, etc. 

‍Home pickup

Speaking of processing returns from the customer’s doorstep, home pickup is growing in popularity. Retailers (and D2C brands in particular) must start investing in this type of premium service. Having a courier collect a return straight from the customer’s home or office at a scheduled time might seem excessive, but it’s something people want more and more.

“When done right, home-pickup gets consumers to return goods 25% faster. That’s really important because every day a pair of shoes or a sweater sits in the closet the opportunity cost for the retailer increases—especially in the current environment of extreme supply chain disruption.” 

-Amit Sharma, CEO Narvar

‍Return drop-off

Online shoppers love being able to return products to drop-off points near their home. That’s why retailers are focusing on building partner networks with marquee brands (e.g., Walgreens, Simon Malls, etc.) where customers can drop off returns to an “unaffiliated” brick-and-mortar by way of a QR code on their smartphone. 

Remember…

Every day that a to-be-returned item remains out of inventory—whether with the customer, in the mail, or awaiting processing—the chance of reselling it at full price drops. When it comes to items with a short shelf life (e.g., seasonal apparel), the pressure is on. But more importantly, the less convenient the returns experience, the less likely a customer is to stick with a retailer for the long term. 

To learn more about optimizing returns for your brand, read the ebook, How to Optimize Reverse Logistics.