To charge or not to charge for returns – free returns

With rising shipping expenses and the labor involved, it makes sense for you to charge for returns. Especially with what is known as bracketing – buying multiple sizes and/or colors of the same item and sending back you don’t want. 

This is expensive for retailers as they have to pay to get back those items. And it is often not only the cost of shipping the return back. There is also the labor costs, the cost of potentially cleaning or repairing the item, repackaging it to make it look better for the next customer that will receive it. A return can cost a company between $10 to $20, not including the freight cost.

Free returns have not always been a thing

Free returns have not been the norm, rather has been a trend in the last five years, mostly due to Amazon setting a standard. This is however changing, with major companies such as H&M beginning to charge for returns at, or at least testing it in UK and Norway. 

Some are instead doing a different approach where loyal customers get a free return, because they are a part of companies VIP rewards program.

The customers want free returns but does it make financial sense?

Majority of shoppers want free returns, in fact, 76% of consumers stated that it was an important consideration factor when shopping online. This makes sense as free always feels better. 

The question is therefore whether or not you as a business actually should. While customers may prefer free returns, it may not always make financial sense to your business. After all, the logistics and return shipping fees results in an additional cost to your business that impacts your bottom line. 

Therefore, you need to analyze whether or not these extra costs associated with returns is something you can manage financially today. If not, you need to clearly outline in your return policy what you charge for returns.

To offer or not to offer? That is the question

Free returns can be a great way to build trust with customers and increase sales. Customers are more likely to purchase from a company that offers free returns, as they know they can return the item if it doesn’t meet their expectations. However, offering free returns can also be expensive for the ecommerce store, as they have to bear the cost of shipping and handling for returned items.

Offering free returns can increase customer satisfaction and loyalty. It gives customers the peace of mind to buy from the ecommerce without worrying about the cost of returning an item if it doesn’t fit or work as expected. This can lead to repeat purchases and positive word-of-mouth.

On the other hand, free returns can also impact the ecommerce’s bottom line. The cost of shipping and handling returned items can add up, especially if the ecommerce has a high return rate. Additionally, some items may be damaged or worn during the return process, reducing their resale value.

When to offer free returns

To balance the pros and cons of offering free returns, ecommerce businesses can consider implementing a few strategies:

  1. Offer free returns for a limited time: This can give customers enough time to decide if they are satisfied with their purchase, while limiting the ecommerce’s financial exposure.
  2. Implement a return policy that covers only defective or damaged items: This can help the ecommerce reduce the number of returns and minimize costs.
  3. Offer free returns for certain categories of products: For example, the ecommerce could offer free returns for clothing items but charge for electronics.
  4. Provide clear information about the return policy: Customers should be aware of the return policy before making a purchase, so they know what to expect if they need to return an item.

In conclusion, whether an ecommerce should offer free returns or not depends on various factors, including the type of products sold, the target audience, and the overall business strategy. The ecommerce should weigh the pros and cons and consider alternative solutions to find the best balance for their business. PS. If you decide to charge for returns, remember to clearly outline it in your return policy.