Most small business online retailers dread returns and consider them a nuance and profit killer. Many smaller eBay sellers have pushed back for years against the marketplaces to make returns easier on buyers.
Like so many other “innovations” in ecommerce, Amazon’s return policy has been the Gold Standard for consumers for years. Many times, Amazon will provide refunds or credits to shoppers when a return is just scanned by the shipping carrier.
With more consumers planning to shop online for the holiday season as the second wave of the COVID-19 crisis is hitting most of the U.S., sellers are again wondering how they may need to address returns during this time of year.
Doddle, an international solutions provider that provides returns technology, conducted a survey among 1,355 U.S. consumers in October 2020* and found that the returns experience plays a major role in shopping decisions.
When it came to returning items during the November-December 2020 timeframe:
- 87 percent of respondents considered the returns experience a significant role when making purchase decisions.
- 63 percent of respondents wanted free returns.
- 51 percent desired convenient locations to which they could return their items (e.g., local store, post office, etc.).
- 51 percent noted good communications and visibility during the refund process (e.g., tracking the package, confirmation of receipt, refund details, etc.). This jumped in importance for consumers since May, with 41 percent of respondents noting this then.
- 49 percent wanted items delivered in packaging that can be re-sealed/re-used for returning something.
- 49 percent highlighted free exchanges.
“As the surge in online shopping continues, particularly with the potential of more lockdowns to come, the need for meeting consumers’ ecommerce returns’ desires only continues to grow as well,” said Dan Nevin, chief revenue officer, global retail for Doddle.
There Is A Cost To Returns – Is A Good Return Policy A Marketing Cost?
There is no question there is a cost to returns. Sometimes, returned goods cannot be sold as new, and if a merchant is in a highly competitive category where competitors are offering free returns, there is an additional cost that takes away from profits.
But with 87 percent of shoppers considering the returns experience a significant factor in their buying decision (the number is 93 percent among consumers 55 and older), it seems there is very little choice for online merchants but to implement the best possible returns policy and experience.
Maybe one of the best ways to look at the cost of handling returns is to consider it a marketing or customer acquisition cost.
It sounds strange, but the case could be made that if a good return policy and experience is a key factor in the purchase decision, the cost of managing returns may need to be considered as part of a marketing expense.
Most business owners probably would agree that marketing to a satisfied customer is far less expensive than trying to convince a new customer to buy from their online store.
Therefore, considering return costs as part of customer acquisition costs (CAC) may not be so far fetched after all.
“The insight from this survey provides a good starting point for retailers to consider, but with returns’ clear impact on customer satisfaction, it’s critical for retailers to ensure they are able to digitally capture all of the necessary details with regards to customers’ returns and use those to bolster overall shopping experiences,” added Nevin.
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* Doddle’s survey was conducted by YouGov. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,355 adults. Fieldwork was undertaken between October 15-18, 2020. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).