The Effects of Returns on a Variety of Industries

UPS coined Jan. 2 as National Returns Day, as it marked the pinnacle of the holiday gift return period. UPS expected to handle 1.9 million returns in that one day, which would have been 26 percent more than the previous year and marked the seventh straight record-setting year.

According to the UPS Pulse of the Online Shopper study, 73 percent of online shoppers say the returns experience affects their likelihood to buy from a given retailer again.

“Returns are the new normal, and as part of a seamless customer experience, shoppers expect a friction-free return policy,” said Sara Galloway, Director, Strategy and Consulting for Aimia. “Most retailers have goals of acquiring, growing and keeping their customers; a new key consideration is, ‘Are returns just the cost of doing business with customers to help achieve these goals?’ Moving into 2020, retailers should expect to have an easy return process, and to help offset this cost, they should focus their efforts on driving additional qualified purchases from new and existing customers.”

Data from Valassis, a marketing technology and consumer engagement company, backs up this sentiment, showing that return experiences and policies can influence additional purchases. Valassis says 71 percent of consumers prefer to return or exchange items in store and 77 percent said they are likely to purchase other items when returning or exchanging items in store.

“A great example is the partnership between Kohl’s and Amazon, where Kohl’s accepts Amazon returns, unpackaged and free of charge,” Galloway said. “Together, they combined Amazon’s scale with Kohl’s nationwide footprint to deliver a new customer experience benefit and reach new customer markets.

“Other partnerships are launching to create a friction-free return experience, such as Revolve and Happy Returns,” she continued. “Here, customers can bring the item(s) they wish to return to a Happy Returns Return Bar location. Their hassle-free message is: ‘No receipt, return label or shipping box necessary! You just provide your email address or order number and your refund will be initiated immediately.’”

According to a Reuters report, which cited a 2018 report from Appriss Retail and National Retail Foundation, approximately 10 percent of items purchased in the United States are returned to retailers every year, resulting in more than $300 billion in lost sales.

Greg Buzek, founder and president of research and advisory firm IHL Group, told Reuters that returns are a major factor, particularly for the apparel industry, and he estimates that annual global losses from retail returns are nearly $1 trillion – up from $600 billion in 2015. The study by Valassis also found that 54 percent of consumers noted a retailers’ return policy caused a frustrating experience for them in the past.

Bruce Temkin, Head of Qualtrics XM Institute, cites that 75 percent of consumers are “very likely” to forgive a company for a mistake if they think it delivers “very good” CX, whereas only 14 percent of consumers are “very likely” to forgive a company if they think it delivers “very poor” CX.

"Loyalty is a byproduct of positive customer experiences,” said Emily Rudin, Chief Customer Officer at CrowdTwist. “It is only by recognizing consumers and responding to their affinities, even if that means providing flexible return options, that brands are capable of fostering brand loyalty, reducing churn and maintaining a competitive advantage in a saturated ecosystem."

The recent research conducted by Qualtrics also cites that 94 percent of the consumers who give a company a “very good” CX rating report being “very likely” to repurchase from that company, while only 18 percent of those who gave a company a “very poor” CX rating say the same.

“At Aimia, we suggest using loyalty data and personalization to counterbalance the rise of returns,” Galloway added. “Make purchase recommendations to the consumer that they actual want by using attributable data to enforce customers seeing the value of a purchase vs. the price of a purchase. Additionally, data collected through loyalty programs enables retailers to identify (and predict) the serial returners that may be negatively impacting margins.”


More on returns from Loyalty360

eCommerce Returns: Best Practices for Fashion Brands

Overstock Enhances Club O with Free Returns and a Price-Match Guarantee

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