The benefits of offering prepaid return shipping labels
Samir Kamnani
·March 27, 2024
Whether they’re signing up for your loyalty program, checking out their shopping carts, or tracking their orders, shoppers have come to expect a streamlined, intuitive experience at every point of their conversation with your brand.
Friction – anything that interferes with the experience of a customer trying to accomplish their goal – is a dirty word in ecommerce. A Gartner study found that 96% of customers who experienced high friction are more likely to become disloyal, purchase less frequently, and spread negative reviews about your brand.
Unfortunately, while merchants tend to prioritize frictionless experiences while working to make a sale, it’s often an afterthought during the post-purchase experience.
Case in point: the returns process.
It should come as no surprise that a customer might want to return a product – up to 40% of them do, depending on product category.
So if you make it complicated for a customer to initiate a product return, and force them to pay for return shipping, it’s liable to leave that customer with a bad taste in their mouth – creating friction that may keep them from coming back to your brand.
If you want to build a seamless post-purchase experience that will help you build customer retention, even among shoppers with return requests, offering prepaid return shipping labels should be a key part of your returns management strategy.
In this article, we’ll discuss:
- How return labels work
- What are the benefits?
- How can you set up a streamlined returns experience?
How return labels work
Prepaid return shipping labels are pretty self-explanatory, really: They’re mailing labels that customers can use to ship returns back to your warehouse, at no cost to them.
In some cases, merchants proactively include these prepaid labels inside the package along with the customer’s original order, just in case the customer needs to make a return.
In other cases, merchants offer printable return shipping labels that customers can access through an online dashboard after they’ve initiated a return request.
Merchants pay for prepaid shipping labels upon label creation. For merchants that distribute prepaid labels to all of their customers, they’re paying a lot of extra money upfront for return shipping costs that their customers may not actually need. You can void the labels if they’re not used after a certain period of time, but you won’t have access to that capital until the refund from the shipping company is complete.
Conversely, by providing prepaid return shipping labels only upon a customer’s request for a refund, there’s a much higher likelihood that the label will actually be used to process a refund. (If the customer ends up changing their mind about the return and keeps the product, don’t worry – you can still void the label.)
What are the benefits of offering prepaid return shipping labels?
Enhancing your post-purchase experience by generating return labels offers a variety of benefits to you as a shop owner – as well as to your customers.
For merchants:
- Enhanced customer satisfaction
By eliminating the hassle and expense of returns for customers, merchants can significantly improve the shopping experience, leading to increased customer satisfaction and loyalty. - Streamlined returns process
Prepaid labels simplify the logistics of returns, allowing merchants to manage and process returns more efficiently. This can lead to faster restocking and resale of returned items, reducing the overall cost of returns.
- Control over shipping costs
Merchants can negotiate rates with shipping carriers and choose the most cost-effective shipping options for returns, controlling overhead costs.
For customers:
- A streamlined returns experience
Merchants that provide easy access to prepaid return shipping labels eliminate the friction from the returns experience, making it easier for the customer to complete their end goal of sending back an unwanted product for a refund. - More confidence in their purchases
While some brands put the onus of returns on the customer, and ask them to cover return shipping fees, offering prepaid returns makes customers feel confident that they can change their mind about a product without being penalized – which will help encourage them to make purchases that they might be on the fence about.
How can you set up a streamlined returns experience?
As we mentioned previously, prepaid return labels are an integral part of offering a best-in-class returns experience – but there’s more to it than that.
To deliver a streamlined returns experience, it’s important to provide your customers with access to a self-service platform like Loop, where they can initiate and manage their returns. They’ll be able to request printable or scannable return mailing labels for the products they want to send back, and choose between package pick-up from home, or dropping the parcel off at a nearby drop-off center – whichever is most convenient for them.
Loop also makes it easy for customers to see what their alternatives are, encouraging them to consider other product options rather than jumping to a refund. For instance, if a shopper requests a return on a pair of shoes that are a half-size too large, your brand can offer them an Instant Exchange, applying the credit from their previous purchase to the new one before the customer has even sent back the package.
By providing a seamless, hassle-free avenue to explore exchanges, you’ll lead more shoppers to give your brand another chance, increasing retention and lifetime revenue.
While the cost of prepaid return shipping labels may cut into your profit margins, the value they can bring in helping you deliver a best-in-class returns experience is well worth the expense. By setting up a streamlined and efficient returns strategy that prioritizes a great customer experience and keeps shoppers coming back, you’ll be able to set up your brand for sustainable growth for years to come.
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