About the Study For years, retailers and merchandise suppliers have considered returns a cost of doing business. If “fast and easy” returns are a...
When Creating a Return Policy, Should You Use the Carrot or the Stick?
Two Unique Approaches to Return Policies
It is not news that apparel returns are growing. Despite the estimations that 25% to 35% of all online apparel sales are returned, free returns remain a standard operating procedure for almost every retailer. So how are apparel retailers coping? One way in which eCommerce retailers are addressing this issue is by experimenting with creative Return Policies that aim to encourage customers to keep their purchases.
Since 66% of consumers review the return policy before completing a transaction, and the NRF found that 32% of shoppers said return policy was an important factor for purchase, it makes sense that a good return policy forms the foundation for customer satisfaction and reducing returns in the long term. In this blog, we explore two very different Return Policies from retailers who have the same target market (millennials) and offer a few things to consider when writing your own Return Policy.
Shopbop (now owned by Amazon)
This hyper-trendy fashion retailer allows free returns and includes a prepaid shipping label in their packaging but sets aggressive time limits. The customer has 15 days from the date of receipt to return for free but is charged $10 if the return arrives at Shopbop after 15 days from date of receipt. Merchandise must be returned in saleable condition within 30 days. Thereafter, returns are not acceptable. The incentive is clearly to not return.
The activewear Lululemon-challenger also accepts returns up to 30 days but takes a different approach: Before granting a refund, the returns landing page asks the customer whether they want a different color, a different size, or a different style before they start the return process. It attempts to save the sale by encouraging an easy exchange. The incentive is to effortlessly re-satisfy the original purchase desire.
Which is the most effective approach? Carrot or stick? Judging by the success of each brand, both must be acceptable to their customers and most likely are a reflection of brand vibe. Shopbop is about assertiveness and style—being confident in one’s fashion decisions, so their “think twice” approach to returns fits. Similarly, Outdoor Voices is about “doing things”—another expression of confidence, but in this case, the message is “Not right? That’s ok, try again”. Once again, very fitting with the brand vibe to confidently keep moving.
A similar audience, two different approaches. While not a total returns solution, a brand-sensitive approach to creating a return policy is something to consider.
3 Things to Consider When Creating a Return Policy
How does the Return Policy reflect your brand?
NPR once said of L.L. Bean’s famously lenient, but now discontinued, lifetime return policy that: “As a business practice, it’s expensive. As advertising, it’s cheap.” The lifetime guarantee was once a signal of their pride in the durability of their clothes as well as a neighborly approach to business built on the “honor system.” Are you buttoned-up and business-like in approach or laid-back and casual? Your return policy should be congruent with that voice or your customers will be confused.
How user-friendly is the policy?
Is it difficult to follow or do you make it as clear as possible? Is it impossible to find on the website? Does it effectively manage customer expectations? You don’t want your customer to be frustrated by the time they find the information they need. That’s a bad place to start off the customer’s returns experience.
Can you convert the return into an exchange?
Customers returning products are an opportunity, not a problem. Make your appeal to exchange friendly, helpful, and quick—maybe even fun. The Outdoor Voices frictionless approach is one good model to follow. It understands the primary reasons their customers return (Size/Fit and Color) and offers a quick and easy way to initiate the exchange. Another option is to set clear guidelines on what qualifies for a refund as opposed to store credit.
While your Return Policy forms the cornerstone for a return process that increases sales, saves money, and improves customer experience. It is only one small piece of the Returns Reduction puzzle.
To learn more about Returns Reduction, read about Newmine’s solution, Chief Returns Officer®, here.