Offering your customers free returns in 2022 has become table stakes. Nearly 50% of online retailers now offer free returns shipping and for good reason; over 67% of consumers will read your return policy before purchasing and 80% of them are expecting free returns.
If you are not offering your customers free returns or strongly considering making that switch, you will fall behind your competition.
Let’s talk about the 800-pound gorilla in the room: Amazon. 74% of US consumers start their shopping journey on Amazon. The expectation of free shipping and free returns shipping has been set well before the shopper has landed on your site. As has the ease of initiating a return (more on that later).
Free Returns Converts
You don’t need a degree in psychology to understand why offering free returns helps drive buyers to purchase from your site. As consumers, each added friction point in the sales process introduces another reason for us to object. When customers see restrictive returns policies, including return shipping charges and restocking fees, we mentally add this to the total cost of the transaction. We ask, “Do I love this product enough to gamble $5, $10, $15+ that I’ll still love it when it arrives?”
For a customer who is not a brand loyalist and who is running through their internal decision matrix of “to buy, or not to buy”, this perceived gamble is enough to dissuade them from purchasing from you and buying it from a competitor who does offer free returns.
You probably wrote and rewrote the copy on your website and product descriptions to ensure they conveyed to potential customers the quality of your product, the support you put behind them, and your overall vision as a brand. Having a weak returns policy can undermine all of this messaging.
When you offer a generous return policy, this tells customers you are so confident they’ll love the product you have no reason not to offer a generous returns policy because they won’t need it. “Free Returns” is the modern-day version of “Money-Back Guarantee.”
What you don’t want is a return policy that reads like you would go bankrupt without it. Are you getting so many returns that offering free returns would be too damaging to the business? That throws up a big red flag.
Charging For Returns is Not a Customer Filter
We’ve talked to many online merchants who have said they do not offer free returns because it filters out the “non-serious buyers.” Others tell us it keeps their return rate lower.
This perceived reduction in returns is 100% artificial. What is actually happening is you are losing out on sales from prospective shoppers who are turned away by your return policy. We’ll call these individuals the “average shopper.” They are most likely new to the brand, shopping a wide range of offerings, and exhibit “average” consumerism traits.
The average ecommerce return rate sits right around 20%. If your return policy is turning away 10 “average shoppers”, that’s 8 shoppers who will not be returning their items in exchange for preventing 2 returns.
Yes, returns can be costly (but they don’t have to be). But losing out on those 8 customers is even more costly.
All is not lost on those 2 customers who will initiate a return, either. 92% of shoppers say they will buy again from a retailer if the returns process is easy. A key element of an easy returns process is no-cost returns, and you can elevate this experience with a self-serve returns portal.
How Can I Afford to Offer Free Returns?
The simple answer is to add it to the purchase price just like most merchants do in order to offer free outbound shipping.
The key to pulling this off and still offering a competitive price can be found with a little help from some financial accounting. Don’t bail on us yet; it’s very straightforward.
Unlike outbound shipping where you add the exact freight cost to the purchase price, to cover returns processing costs you only need to add a fractional amount. Ideally, you would know your rate of returns, but if you’re just starting out, it would be safe to start with the average ecommerce return rate of 20%. You can adjust this up or down based on your product vertical.
If your freight cost on an item is $10 and warehouse overhead is another $5, for a total of $15, you would add $3 to the purchase price of each item.
Make Returns Easy
The best way to reduce the impact returns have on your business is to make the process of returning an item easy. You need to meet or exceed the Amazon experience shoppers came to your site with.
It’s not just the customer who benefits from an easy return process. Your operations and support staff also benefit by reducing the administrative stain manually fielding and processing returns requests creates.
You can easily do this by implementing returns management software. With this you get:
- Branded Self-Serve Returns Portal – This allows your customer to submit their return at their convenience and with the instant feedback loop of knowing their return request has been submitted
- Shipping Label Generation – With external shipping provider integrations, labels can be instantly rate-shopped, purchased, and delivered to your customer.
- Data Analytics – Instantly capture product level return reasons and frequency, allowing you to provide valuable feedback to your marketing and product teams.
Leverage Free Returns Across Your Site
We hope by now you see the importance of offering free returns and are ready to implement it. Once you do, you have an extremely powerful motivator as a marketing asset, so be sure you use it.
You should be advertising free returns in as many places on your site as possible. Put it in the header, the footer, and on each product page.
We already know two-thirds of shoppers will go looking at your return policy. Let them know right from the start, so they spend more time shopping for your products and less time hunting for your return policy.
The Final Word of Free Returns
You already knew you needed to offer free returns. It’s why you set out to do your research on the topic.
You should now have the confidence to move forward with offering free returns knowing that you can afford to do so and that when done right, returns can actually be your competitive advantage.
Want a Personal Review of How to Implement Free Returns?
Contact us here. We’d love to help you structure your returns process to ensure you maximize the many benefits a generous returns policy offers while minimizing the cost impact on your business.