How to balance controlling costs against delivering a great customer experience
Samir Kamnani
·March 19, 2025
In an era of skyrocketing operational costs, how can brands build sustainable returns policies—without alienating the loyal customer base they’ve worked so hard to build?
It’s a tough balancing act, but with the right processes and technology in play, you can set up smart strategies that will help you retain profits without negatively impacting customer retention.
Recently, Loop’s Senior Product Marketing Manager, Samir Kamnani, and Emily Mcmorran, Customer Journey Manager at the women’s fashion brand Oh Polly, joined the Inside Commerce Podcast hosts, James Gurd and Paul Rogers, to share their insights around building a best-in-class returns strategy that prioritises a great customer experience without hurting profits.
Watch the full episode below—or read on for a high-level overview.
2024 was the year paid returns took over
During the pandemic-era explosion in ecommerce, free return shipping was the norm for brands. But that’s no longer the case.
“It’s definitely been a shift in the market, and I think it's obviously because operating costs are so high, shipping is expensive, warehousing costs are expensive,” says Kamnani.
Additionally, shoppers are increasingly taking advantage of stores’ generous returns policies, he adds: “We're seeing the rise of practises like bracketing, where you will order a bunch of things or order a couple of the same item in different sizes knowing you're going to return them, or you plan to wear something for a night out and see if you can return it after.”
As a result, over 60% of Loop merchants are now charging return fees—a 45% increase from 2020.
Prioritising a great customer experience with paid returns
With the shift to paid returns, have brands been losing customers?
In general, says Kamnani, that’s not been the case: The first time they’re faced with return fees, he says, “they might have a little bit of negative feedback, but we have seen that the overall impact of a brand doing this is little to none. We saw that the return rates remain stable for brands who previously were doing free return policies and then implemented a fee, and then we also saw that their repeat purchase rates remain stable as well.”
What’s most important when implementing fees, he says, is ensuring that the shopper has a seamless returns experience. “If you're making it easy for the customer, if you have a good drop off experience… then they're more willing to pay for that return.”
On the other hand, “if you're making it a headache for the customer as well, then they're going to be really upset about needing to pay.”
Oh Polly’s experience implementing returns fees for their UK customers serves as a case in point. Since introducing fees three years ago, “what we've learnt is to just keep it simple for the customers,” says Mcmorran.
“Simple flat fee, keep it fair, keep the return policy as straightforward as possible. And in doing that, then the kind of feedback that we have from customers and the reaction based on that decision isn't as bad as if you were to make a big bold change overnight.”
Oh Polly has also introduced Store Credit and Exchanges as options for their UK Customers through Loop’s returns portal. “We are able to keep those return methods free to move the needle,” says Mcmorran. “So although we’re charging fees for returns, we’ve been able to play around with the different outcomes and offer some benefits elsewhere.”
Using customer feedback to improve the returns experience
Every brand’s customers are unique—so how can you make sure that you’re building a post-purchase experience that will resonate with their needs?
For that, ongoing feedback collection and analysis is critical. “I think it's key to gather customer feedback before you make decisions, and not just after the fact as well, so that you can hear your customers out,” says Mcmorran. “Obviously in an ideal world everyone's going to say, ‘yeah, I want free returns, done and dusted, but no, it doesn't work for an ecommerce business. So I think it's really understanding the customer feedback, taking that on board, feeding that back to all the relevant departments.”
Mcmorran uses a range of strategies for collecting feedback at Oh Polly, including focus groups, NPS survey scores, on-site feedback during the ordering and returns processes, the brand’s TrustPilot scores, and customer support tickets. She’ll review trends in feedback with relevant stakeholders, working together to build an action plan to address gaps and flaws.
“I think it's good to have the quantitative data but also the qualitative data, and think about the impact on brand reputation and brand image,” she says. “Sometimes it can be a battle to know what's best for the business, but ultimately the customers are the business. So it's about weighing those things up, and trying to come to a happy medium where the customers aren't going to be annoyed with new policies that are coming into play, but then also trying to move the needle with reducing refunds and trying to be strategic about things as well. It's a balance.”
Innovations in returns management
Increasingly, brands are leveraging returns operations technology to strike the right balance between protecting profits and delivering a great customer experience. In our Inside Commerce conversation, the speakers discussed some innovative technology products that deliver on both fronts.
Optimise for exchanges and store credit
When processing returns manually, customers typically default to a refund—even if they might simply prefer another product that your brand offers. With Loop’s Instant Exchange and Shop Now & Later products, however, brands can optimise the returns process to facilitate seamless exchanges, or enable shoppers to swap the product for store credit they can use at a later point in time.
“I think specific to the UK market, we're seeing more brands lean into exchanges and see returns as an opportunity” rather than “a necessary evil,” says Kamnani. “And so it really creates that opportunity within the returns flow of opening that door to retain the revenue and keep it within your business, as opposed to just getting the return done, getting rid of the support ticket and offering the refund. You create that nice touch point in the customer journey that almost makes it feel like shopping again.”
At Oh Polly, Mcmorran and her team have been using these products to great effect. While they haven’t seen a notable difference in the return rate yet, “our refund rate has reduced and our store credit rate has increased and that's just from iterations, like tweaking return policies, offering incentives for store credit and exchanges,” she says.
Pay upfront to offset returns costs
With rising operational costs, retailers are increasingly moving away from offering free return shipping to their customers. But it’s important to do so in a way that doesn’t alienate your shoppers—and that’s by guaranteeing them access to a premium returns experience.
With Loop’s new product, Offset, customers can pay a small amount at the point of purchase to gain access to a free and convenient return later. “So for example, if a brand has a £10 return fee, maybe you give the option of only paying £2 at checkout, and then you don't have that fee later if you do return. And so what we see is this is really kind of a win-win for all parties,” says Kamnani.
For shoppers, Offset provides them with additional peace of mind around their purchases, giving them confidence in the returns process. And on the brand side, you’ll be able to build a cash buffer to cover the cost of returns fees, knowing that only a fraction of the shoppers who purchase Offset will process a return.
Use return insights to improve QC
When a shopper requests a return, it’s important to understand why it’s happening. Some shoppers may simply not like the product, but in many cases, it’s due to factors such as a poor size or an inaccurate product description, or even a product defect. Getting insights around this data can help you improve your product quality and customer experience, leading to lower return rates.
When processing returns through Loop, brands can set up a questionnaire asking shoppers the reason for the return, including parent/child categories and open fields where shoppers can share additional information. The team can then review all of these return insights in a centralised dashboard.
Oh Polly has found these reports invaluable for enhancing quality control and improving the customer experience. “Our QC team will look at these Loop reports, they can do it by various things by SKU, by varying by specific collections sizes, aet cetera, all within the Loop dashboard,” says Mcmorran. “And then they can use that data monthly to kind of draw any key issues or patterns that they're seeing with particular garments and popular return reasons for that garment, whether it's quality or too big, too small, and then they feed that back to the design and product teams. So we've got that kind of process in place looking at customer feedback in the return data and their return reasons.”
This process has helped Oh Polly address both product quality and sizing issues in their products, helping them to offer more relevant recommendations to their shoppers. By addressing these return insights, the brand has been able to optimise their product quality and descriptions, which should lead to lower return rates on these products in the future.
Combat returns fraud with an AI model
The conversation also touched on the rising incidence of returns fraud and policy abuse in ecommerce: Our recent survey found that 64% of UK retailers said that returns fraud was the biggest current challenge to their businesses, with policy abuse coming in second (49%). These issues can have a massive financial impact on businesses, with retailers losing £10.40 to fraud for every £100 in purchases.
To combat these challenges, Loop has introduced a new Fraud Model that’s designed to protect brands from abusive behaviour. “We have built a machine learning AI model to proactively identify potentially fraudulent returners or return abusers, and we can give that information to brands to help them fine tune their return policies and… play some strategic guardrails around shoppers that are doing practises like that, but keep the experience really seamless and convenient for your good shoppers that are not taking advantage of your policies,” says Kamnani.
At Oh Polly, the brand has been able to use their fraud and abuse data to set up safeguards, such as value thresholds for returns and ensuring inspection before refund on certain items. “Loop enables us to kind of play with different ideas and think of more creative ways to tackle the situation, rather than just putting fees up and essentially annoying our customers, which is the last thing we want to do,” says Mcmorran.
While 2025 may be a tumultuous year for UK ecommerce brands, you’ll be able to control your costs and deliver a superior customer experience with the right ecommerce technology tools and a strong strategic plan for managing the customer journey from start to finish.
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With Loop, your brand can offer everything from refunds to direct exchanges to shopper incentives and more. Even better? These exchanges build your business.