This is probably one of the areas I’m most passionate about. Turning a cost-centre into a profit driver. Part of selling someone something is that they are happy with their purchase. There is nothing more disappointing as a customer than receiving your order and it not being as expected.
They are instantly filled with the disappointment that they can’t wear the jacket they’ve just bought for this weekend or the dress for that wedding. Not only have they got to come up with another option, they are left with the mundane task of having to send the item back and then wait for a refund.
This is where the retailer gets to become the superhero in the story. You must have a “don’t worry we’ll take care of it approach” by making it super easy for the customer.
The worst returns ratios I’ve seen are most commonly found with retailers who are scared of returns, who hate the idea that a customer might want a refund. By embracing returns and helping the customer recover from the disappointment of having to return an item, you are building brand loyalty with that customer which will repay tenfold over time.
Shopify estimates that two-thirds of customers review the returns policy before making a purchase. By having restrictive returns policies and poor customer support, you are just damaging your brand and your conversion rate. It is always a massive red flag for me too, brands who do not back themselves that you’ll want to keep the product and you’ll be happy with your purchase tend to be the ones to avoid.
Check out Thread.com who in my opinion have this nailed. They have a 100 days returns policy, which combined with Klarna (pay later method) means that customers have generous time to work out whether they are keeping the product or not and the balance of the money just nets off in their Klarna account.
Thread also don’t allow exchanges, which I think is a great idea. Exchanges are always the hardest and most laborious type of order to deal with. By the time exchange requests are received, what was in stock may have gone out of stock, thus disappointing the customer further. The best case for customers is that if the size they need is available is to order it there and then, safe in the knowledge their refund will be processed quickly. To commit to this you need to maintain a slick returns process at all times and some confidence that the loss of the exchange doesn’t lose you net sales.
If you get this process right, it stands out against the archaic returns policies and gives you an edge over competitors.
Moral of the story is, if you back your product, back it up with a returns policy to match. It will create value for you and not cause harm. The volume of your returns might increase but not as much as your average order value and your conversion rates, which means your returns rate actually decreases.