Edition 123, February 2023

Rip the Bandage off Returns: Rethinking opportunities in your returns experience

By Jordan Chatelain, Passport Global

Let’s get one thing straight – returns hurt.

Regardless of the size of your eCommerce business, returns present added costs and complexities that can seriously sting the bottom line.

Many merchants understandably approach the returns challenge with a “just enough” attitude. They offer bare minimum experiences like customer support emails or phone numbers. Or they create friction with limited return options and restrictive return policies.

This mindset equates to applying a bandage to a problem that needs thoughtful and comprehensive treatment. Starting with a fresh perspective, merchants can embrace the opportunity in returns.

Returns shouldn’t hurt. They can help lower costs, increase revenue, and improve customer satisfaction. Ultimately, returns can become a supplement that boosts the health of any eCommerce business – but you must first rip off the bandage.


Shifting your mindset around returns

For many merchants, returns are viewed as nothing more than a necessary evil. But that’s not the full story. “When merchants realize returns are an opportunity, not a burden, everything changes, ” says Hannah Bravo, Chief Operating Officer at Loop, “They see a positive impact across the board. Lower costs. Higher revenue. The works. It’s an amazing thing to witness.”

Here’s the full story.

Acquiring customers is costlier than retaining customers, with some estimates indicating acquisition costs outpace retention costs by 5-to-1.1 Customers seeking to return a product have already overcome a significant hurdle by making their initial purchasing decision. So merchants must view returns as an opportunity to earn customers for life.

“More often than not, returns are due to a specific product issue. Something didn’t fit, or the customer didn’t like the color,” says Bravo. “Returns are make or break moments. Merchants can either choose to simply write off returns as costly refunds. Or they can leverage them to help customers find another one of their products they’ll love.”

Returns offer merchants a second chance to retain their customers by offering better return options like exchanges, store credit, or even bonus credit. This keeps costs down and increases revenue. But most importantly, it retains customers and drives loyalty – inevitably offsetting rising customer acquisition costs, too.


Small changes can have big impacts

One of the most overlooked aspects of the return experience is often where the experience begins – the return policy.

According to a survey of 1,000 eCommerce consumers conducted by Shippo and Loop, a staggering 84% of participants said they read a merchant’s return policy before committing to a purchase.2 Almost half said they would shop elsewhere if they were dissatisfied with the policy.

So why do many return policies read like a legal document, or worse, a warning?

“We know the return policy is viewed by an overwhelming majority of customers, so we encourage merchants to see it as another selling opportunity,” says Bravo.

Presenting a simple, straightforward return policy can go a long way toward instilling confidence with customers because they know they’ll be well taken care of if their purchase doesn’t work out. Make it clear to customers they won’t have to jump through hoops to return unwanted items.

Merchants like Zappos famously use mechanisms such as the return window (the time customers are given to return a purchase) to demonstrate how forgiving their return policy is, with a full 365-day return window afforded to their US customers.3 While such a generous return window may seem troubling, the 2022 Shippo-Loop survey found 93% of customers needed no more than 2 weeks to return an item purchased online.4 Yet, Zappos’ extended return window is widely known, and it has undoubtedly been a consideration for countless customers over the years.

Of course, a year-long return window may not be appropriate for your business, or most businesses for that matter. This doesn’t mean merchants can’t find ways to differentiate themselves with their return policy alone.

Even the presentation of the return policy could leave a more positive impression with potential shoppers. Considering how frequently customers are seeking out return policies, it’s surprising how many are buried in a list of links at the bottom of a store’s page. And how stark the text-heavy policy pages appear compared to rich, colorful product pages.


Make returns work for your unique needs

Investments in your return experience are only worthwhile if they drive long-term value for your business. Improvements to a returns user interface or changes to a returns policy are pointless if they ultimately become a detriment to your bottom line. That’s why crafting a returns experience that both exceeds the expectations of customers and delivers meaningful return on investment is critical.

Embracing the idea that returns are more product issue than anything else, assisting customers with finding an alternative item to exchange for can be an immediately impactful strategy. Collecting more granular data upfront on why a customer wants to return an item can help merchants make more informed suggestions for alternative sizes, colors, or different items altogether.

According to Bravo, “It’s a win-win for all involved when merchants emphasize an exchange-first strategy. Consumers end up with a product they love. And merchants not only retain that sale, but increase the likelihood of creating a repeat customer - ultimately increasing contribution margin at scale.” Another step merchants can take in making their returns experience work for them is tailoring returns to various customer segments.

Many merchants leverage extremely savvy customer loyalty programs pre-purchase, but why not extend that approach to the post-purchase experience? Tracking a customer’s buying and return behavior together can give merchants the flexibility to reward their most loyal, producing customers with a more casual, lenient return experience, or more directly target incentives for exchanges.

Keeping collective tabs on customers’ purchases and returns can also help merchants identify and even thwart more problematic return behaviors.

Still, avoiding returns entirely is always the most foolproof way to minimize impacts to the bottom line – just not through punitive return policies or excessive return fees.

Instead, merchants who collect granular reasons for returns can turn that data into smarter production and merchandising decisions.

Understanding trends in consumer complaints at the SKU level can allow merchants to identify and correct an ill-fitting sweater or explore alternative suppliers for a particular component that causes product failures; perhaps a product photo on the website isn’t correctly showcasing the item’s color.

Moving from “I want to return” to “I want to return because…” can help merchants create a positive feedback loop across their product development and sales processes, with the end goal being a reduction in the number of product returns.


Enjoy the payoffs from committing to a better returns experience

Returns are a key consideration for customers deciding where to shop and should be treated as such. Merchants can’t afford to neglect their approach to returns, as the penalties can be severe: 2/3 of consumers have stopped shopping with a brand completely after a negative return experience.5

However, investing in returns shouldn’t be about avoiding customer churn; commitment to improving your returns experience should be seen as a catalyst to improve customer satisfaction and retention.

91% of consumers say the overall ease of their return experience would directly impact their willingness to shop with a retailer again.6

After all, returns shouldn’t hurt. That’s why we’re encouraging you to rip off the bandage. And begin rethinking returns.


1 https://www.invespcro.com/blog/customer-acquisition-retention/

2 https://lp.goshippo.com/rs/241-IMB-691/images/RPT_2022_E-Commerce_Returns_Report.pdf

3 https://www.zappos.com/c/shipping-and-returns

4, 5, 6 https://lp.goshippo.com/rs/241-IMB-691/images/RPT_2022_E-Commerce_Returns_Report.pdf

Jordan Chatelain
Jordan Chatelain (JC) is the Program Manager for Global Returns at Passport Global. He helps Direct-to-Consumer brands reach their global potential by delivering an exceptional cross-border returns experience. He previously worked in New Product Development at UPS, focusing on international shipping solutions for small and mid-sized business, including cross-border returns.