Marketing gold hidden in retailers’ return woes

As the retail industry counts down to the final days of its fiscal year (ending January 31), the afterglow of a strong holiday season is bringing in an annual return season that is expected to generate about $750 billion, or 14.5% of the industry’s total sales. The shadow is once again casting its shadow. . The logistics of returns are a headache and have become such a huge expense over the past few years that retailers across the industry are forced to adopt liberal policies based on the theory of “lose money, keep customers.” has been reduced.

Efforts to reduce returns by adding fees or limiting return windows may save money in the short term, but they risk alienating shoppers. More importantly, adding friction to the returns process ignores a serious threat to brand reputation and eliminates hidden marketing opportunities.

First, in a First Insight survey last year, three out of four consumers said they would be discouraged from shopping at a retailer that charges a restocking fee. In 2022, Loop, the returns logistics platform in which Shopify has invested, found that nearly 6 in 10 shoppers would consider abandoning a brand due to a poor post-purchase experience in a survey of 1,000 online customers. Reported that it was answered.

A recent survey of 2,000 U.S. shoppers conducted by SAP Emarsys, a cloud-based marketing platform, found that 88% of consumers were “less likely to shop at a retailer if the retailer introduced a paid return policy.” It turns out that I have stopped doing this. The study also found that 72% of consumers “express greater loyalty to retailers that offer free returns.”

The reasons why customers return their purchases have less to do with phenomena like “wardrobes” (ordering clothes in multiple colors and returning all but one color) or whimsical purchases, and more to do with things like fit. It has to do with fundamental issues that retailers can do something about. and quality (i.e. value).

In other words, consumers infer from return policies how much a brand cares about them. When you consider that it costs much more to acquire a new customer than to handle returns, making the process seamless and free starts to look like a smart marketing strategy.

The marketing gold hidden in this dilemma is no great mystery. In 2015, researchers at the University of Texas at Dallas reviewed dozens of research papers on purchase decisions and returns and found that generous return policies generate more returns, but are also correlated with increased purchases. I concluded.

The study also yielded another counterintuitive result. The longer the product return grace period, the less likely shoppers are to return the product. One of the researchers, Ryan Freling, told the Washington Post: They don’t feel pressured to bring it back to the store right away, so in a way they just accept it and accept it and say, “Well, it’s not that bad.” ”

Now, who will win the return game?

When we searched for best-in-class listings, we were told that retailers such as Walmart, Costco, Nordstrom, Zappos, Home Depot, and IKEA are doing well, with IKEA being a few of them.