Customers reacting positively to new return fee structures
Samir Kamnani
·December 3, 2024
The costs of running an ecommerce business have been escalating rapidly, with labor, rent, and 3PL costs rising by 55% over the past five years. Even so, many merchants have been hesitant to recoup their costs around reverse logistics.
After all, customers overwhelmingly say they prefer free returns—so won’t brands lose out on business if they ask customers to pay for return shipping?
You’ll be relieved to learn that, when implemented wisely, the answer is no. Here’s what you should know about how customers are reacting to return fees.
The tide has turned on free returns
Several years ago, nearly all brands seemed to offer free return shipping, but that’s no longer the case. Today, more than 60% of merchants—including leading brands like H&M, J. Crew, and Zara—have implemented customer-paid returns on at least some forms of product returns.
Customers are now primed to pay for returns—and they don’t mind doing so, as long as it’s a hassle-free and convenient experience for them. In fact, 70% of shoppers say they’re willing to pay for a premium returns experience, and 50% already have.
How Loop customers are responding
Here at Loop, we recently launched our new product, Offset, which offers customers the opportunity to pay a small fee at the time of their purchase, in exchange for access to free returns later. We tracked consumer behavior over a period of six months to determine the impact that paid returns had on brands that had previously offered free return shipping.
Here’s what we found when it comes to customer return behavior:
No changes to return rates
Our merchants saw their average ecommerce return rate remain constant at 10%, both before and after implementing return fees.
Steady repeat purchase rate
Our data insights also found that the average repeat purchase rate remained stable, at 48%. That shows that return fees don’t seem to be a deterrent from revisiting a brand, so long as customers have had a positive shopping experience.
Minor changes to refund, credit, and exchange rates
The differences in refund, store credit, and exchange rates were negligible after implementing return fees. We saw the average refund rate drop by 2%, while the average exchange rate increased by 1% (to 28%) and the average store credit rate also increased 1% (to 9%).
All these metrics show that customers aren’t scared off in the slightest by being asked to factor in the cost of return fees. By providing them with a minor surcharge during their initial purchase, you’ll be able to subsidize the cost of more expensive returns, since many of the shoppers who pay for return shipping protection won’t need to use it. That means your shoppers will be able to unlock a cheap, convenient, and efficient returns experience that will help them stay loyal to your brand.
Optimize your commerce operations
Learn moreEnhancing the returns experience
By offsetting the cost of reverse logistics, you’ll be equipped to develop a streamlined, premium returns experience that your customers will be happy to pay for.
Your returns experience should include:
- Self-service returns Shoppers should be able to initiate a return request right from your brand’s returns portal. The portal should show them all of their return-eligible items, and provide automated questions to determine whether the item meets the criteria for a return. This automation can help you reduce the burden on your support team, so that they can spend their time focused on more personalized, high-priority tickets. Merchants can also reduce their time-to-resolution by nearly 10%, delivering a better experience for your customers.
- Personalized return options Some shoppers like to box mail their returns from home, while others prefer to bring them to a drop-off center for a convenient boxless shipping option. Still others might prefer to return items to one of your brick-and-mortar stores, where they’ll have a chance to browse your inventory if they choose an item for exchange. With Loop, you can put all these options on the table for your customers, and store each shopper’s preferences for the next time they need to make a return.
- Logistics integrations Your solution should offer integrations with all of the shipping carriers and 3PL partners you use, enabling seamless visibility throughout the order tracking process. With access to a range of carrier partners, you’ll be able to use dynamic routing to automatically identify the most cost-efficient reverse logistics path for each product return, based on factors including product quality, condition, and shipping fees.
By initiating customer-paid returns, you’ll be able to protect your profit margins while guaranteeing your customers a stellar returns experience every time. Optimize your post-purchase process, and you’ll see your customer loyalty rates soar.
Ready to learn more? Book a demo of Loop.
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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.