How to offer free returns shipping (and make money doing it)
Carly Greenberg
·July 14, 2021
A while back, we asked this question: should brands be offering free return shipping? The answer was a slam-dunk yes.
If your knee-jerk reaction to this idea is to clutch your wallet, that’s okay – stay right there. In this post, we’re going double-down and you how you can offer free returns and actually increase your bottom line at the same time.
For starters, let’s consider the obvious: the biggest ecommerce giant in the world offers free returns with almost no exceptions.
Of course, we’re talking about Amazon. Love ’em or hate ’em, they’re a big part of why people have come to expect free returns these days.
They weren’t the first online retailer to offer free returns shipping either – that was Zappos. And if you follow ecommerce history, you’ll know that Zappos was bought by Amazon in 2009.
Fast forward to today and the trend is clearly sticking: 49% of online stores offer free returns. What’s more, 79% of consumers say they want free returns.
So with most consumers essentially expecting free returns, and only half of stores actually offering them, where does your brand stand?
READ MORE: ECOMMERCE RETURNS BEST PRACTICES: SHIPPING FEES + MORE
Why offer free returns shipping?
Fitting in with customer expectations should be enough, but forget about that for a moment and ponder this epic statistic:
Customers who asked for a full refund are almost 20% more likely to make a repeat purchase.
That metric alone proves that returns are not meant to be feared. In fact, brands who lean into this reality quickly see that it pays dividends. Quick reminder, Amazon has made billions using the principle of free returns.
Most brands think that free returns represent a shipping problem. In reality, it’s actually a refunds problem. Think about it: most products are more expensive than shipping, so what should you be optimizing for?
If you optimize for the customer and repeat business, you can easily negate shipping costs (something we’ve got a huge amount of data on here). Based on that, and the fact that customers now expect free returns, the path should be clear.
But the stats can actually support free returns from another angle too: 52% of returns happen because customers have the wrong size.
Put yourself in the customer’s (ill-fitting) shoes: they bought some boots from you, they don’t fit, and now they have to pay for return shipping… how do they feel? Are they pumped up to buy a new pair? Or are they feeling like they should just go to a physical store and never buy shoes from your online store again?
Shoes, clothing, and other high-return products/brands need to pay attention: if you don’t offer free returns, your competitors will.
Let’s put this simply:
- Customers essentially expect free returns
- Customers who ask for a refund are 20% more likely to buy again
- 49% of online stores offer free returns (including your biggest competitors)
- Your refund problem is far bigger than your shipping cost problem
Based on all that, the way forward is clear. Now let’s figure out how to make online shopping with free returns a reality for your brand.
How to offer free returns in 3 easy steps
Agreed that offering free returns shipping is worth a serious look? Here’s how we’ll do it:
- Promote free returns everywhere on your website
- Change your returns philosophy
- Make free returns easy for everyone
1. Promote free returns everywhere on your website
Here’s the deal: your returns policy is a marketing asset. Recent studies have found that 67% of shoppers check the returns page before making a purchase. When you think of it that way, why not make your returns policy appealing and easy to find?
One way to make it super appealing? Offer free returns shipping. The key point here is that offering it is one thing, but promoting it is the thing that will lead to increased conversion rates and customer loyalty.
Whether your returns window is a standard 14 days or 15 days, or a generous 90 days or 365 days, you should be telling customers that you offer free return shipping on all orders across your website.
At minimum, consider promoting free returns in the following areas:
- The footer of your website:
- Prominently on your homepage:
- On your product and shopping cart pages:
- Within post-purchase emails & transactional emails
Bottom line: If you care about customer experience, it makes sense to offer free returns wherever your customers shop online. Treat your return policy as a marketing asset, and you’re sure to see an increase in sales.
2. Change your returns philosophy
Many brands get stuck thinking about returns the wrong way: the lower the returns rate, the better.
It’s perfectly natural to want to reduce something that appears to be costing your brand money. Here’s why that’s a flawed approach though:
- The returns process is an opportunity to win customers for life: happy customers stick around. Think of it this way, if you are willing to give new customers 10% off their first order, why wouldn’t you be willing to offer free returns shipping?
- A returned item costs more than the cost of free standard shipping: A returned item is a lost sale that needs to be recouped. Therefore, the returns process becomes another conversion point where you can retain revenue.
- Returns can help drive up LTV: Think of it like this – returns keep people in the system. It’s a valuable post-purchase touchpoint that can win trust and get customers hyped for future purchases. One way to kill that hype? Asking customers to pay for their return.
Remember, 52% of returns are due to incorrect sizing, so having an outdated returns philosophy doesn’t make sense for anyone involved. But when you consider the above reasons, the money-making opportunity during the returns process is very real.
That’s really just the tip of the iceberg though. There are so many reasons to focus on returns that it just doesn’t make sense to ignore. For example:
Returns should be encouraged to help improve your product
If happy customers aren’t reason enough to encourage returns, consider the value of all the data you can pull during the returns process.
If you are using a returns platform, collecting data can be really simple. At a minimum, you can ask customers to choose from pre-defined return reasons. If you want to go further, you can give people a chance to write some details.
Better data can help make better products. And better products are bound to sell more.
Return policies can give customers the confidence to buy
If you have an epic 1-year return policy like one of our favorite brands, Brooklinen, you can expect that people are going to be confident in your brand.
If that idea makes you feel sheepish, consider this stat pulled from the over 7 million returns we’ve processed for our brands: 80% of all returns are submitted within the first 21 days.
Spelled out, that means you could offer customers an insanely long return window without a huge amount of risk. Another stat we found: only 5% of returns turn out to be fraudulent.
So you have to ask yourself this: can a generous return policy generate enough sales to recover the products lost during the exchange process? If it didn’t, why would the top brands on Shopify be doing it?
Forcing customers to pay for returns shipping is like punishing them for buying from you
When a customer goes to create a return, they are experiencing some level of post-purchase dissonance. They aren’t necessarily happy – and considering 90% of customers hold on to products they actually wanted to return, they are probably right to want to send things back.
At this vulnerable moment, asking customers to pay for return shipping really hurts them. They took a chance on your product – can’t your brand take a chance on them? Remember, 20% of returns customers make repeat purchases. How much higher could that be pushed if your brand offers free returns?
Bottom line: Honestly, we could go on and on about this forever. If your brand focuses on recouping shipping costs, then you’ll be fighting a losing battle. The fact is that returns are far more than a cost center, they are a huge revenue generator.
Want more proof? Listen to our podcast with Chubbies CFO Dave Wardell as he explains how their returns process raised LTV 100%.
3. Make returns easy for everyone
When we say make returns easy for everyone, we mean everyone: the customer, your service team, logistics department – everyone.
That comes down to more than credit cards, shipping labels/returns labels, and all the little mechanical details. It’s an entire comprehensive process that, done right, can save you time, money, and set your brand’s return strategy on the path to success.
If you’re wondering how to offer free returns on Shopify, Loop has spent the last few years redefining what returns management software SHOULD do. It’s fair to say we’ve become a little obsessed.
Let our unhealthy obsession be your competitive advantage. Here’s how Loop makes returns easy:
- On-demand portal: Customer can start their return anytime.
- Optimized for exchanges: Our system suggests exchanges over refunds at several touchpoints in the returns journey.
- Returns-centric insights: Deep insights help you solve for “why?” so you can reduce future returns without penalizing current customers.
- Easy Label Creation: Make returns easy for everyone with effortless (and printerless) returns.
Beyond that, Loop includes a growing list of integrations that plug directly into your existing setup.
These include logistics platforms like ShipHero, shipping solutions like EasyPost, customer experience tools like Gorgias, even ecommerce email platforms like Klaviyo.
Bottom line:A returns platform can save you time, increase your bottom line, and give you all the data needed to push your business even further. Combined with the other returns-centric strategies mentioned in this post, your brand will enter a whole new era of ecommerce glory.
Wrapping up
With all that in mind, the question shifts from “how to offer free returns shipping” to “how can you afford not to?” Many of the above concepts can be put to work quite quickly, but if you are interested in setting things up in EZ mode, the Loop team can help.
Our product team can walk you through exactly how our system works with a concise product demo. After that, you’ll see how our platform can help shift your brand towards a whole new returns-centric ideology. Join us, won’t you?
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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.