Is the era of free eCommerce returns coming to an end?

The state of e-commerce in 2022 and previous years. The business explosion in internet trading that happened during the pandemic has unanticipated consequences. As a result of the increased sales, purchasing patterns changed, harming most businesses. What type of negative phenomenon is this that has both small and large businesses concerned? Ecommerce returns are a pain, especially when there are fees for return shipping and storage. Most merchants had no idea how costly the returns were to them.

More than a quarter of e-commerce firms have seen an increase in returns in the last two years. And over one-fifth have tightened return policies, and one-third require buyers to use things before returning them. A store will punish about one out of every ten customers who break a return policy. In the preceding two years, over a quarter of stores (26%) reported increasing returns.

In 2021, 16.6% of ecommerce returns will be made online, up from 10.6% in 2020. However, the average online return of 20.8% will stay the same as in previous years. The overall retail sales in the United States last year were $1.050 trillion, according to the NRF. Online transactions totaling $218 billion were refunded, with $23.2 billion (10.6%) judged fraudulent.

Most retailers have trouble, but those in the auto industry have it the worst because almost 20% of their customers return their purchases. Following closely behind are home renovation and housewares companies, with 11.5% of online items being returned, and clothing stores (12.2%). 

Shipping costs are already a big concern for online sellers. Unfortunately, many companies charge exorbitant amounts for the delivery of their products. And even if you think you’re getting a good deal, you may end up paying a lot more than you bargained for. As well as high ecommerce returns rate, warehouse storage and disposal also negatively affect commerce.

Are consumers ready for a game changer?

Are there any changes to our return policy?

 And it may actually take place right before our eyes. As more “serial returners” affect their bottom line, retailers are rethinking their return policies. Big business is very cautious about changing its customer policies. This is thin ice on which sellers are afraid to tread. They are looking for something special and are working in various directions. Because many people simply won’t buy something unless they know that they can get help if they run into problems. As a result, they have changed their return policy.

In May, Zara announced that consumers in the United Kingdom will be charged 1.95 pounds, or roughly $2.45, to return goods online to third-party drop-off spots. Customers can still return online purchases for free to any Zara shop in the United Kingdom. In other European regions, such as Belgium and the Netherlands, Zara already has a returns system in place, but most e-commerce customers prefer to complete returns in-store. It’s unknown if the charge will be introduced in the United States, as the decision is calculated market by market.

Hennes & Mauritz, a Swedish company, has followed the same path.  H&M is considering collecting fees for internet ecommerce returns. Return fees might help companies cut rising costs. The company is putting the new return policy to the test in Norway and the United Kingdom.

Oh, it looks like a trend!

Free returns 

But buyers should not be concerned about this, in my opinion. Most sellers recognize that the expenses of logistics, storage, and ecommerce returns are just problems that must be managed, but not in such a big way. And why is this so?

 Free returns are the “new normal,” and one-fifth of shoppers think they prefer to conduct business with brands that allow them. Customers are unwilling to pay for returns. 

In many e-commerce transactions, customers verify the return policy before placing an order, with 40% saying they won’t order unless it is 30 days or more. 74% of our respondents said they would not buy from an online business if they had to pay for the return.

Recognizing that returns are unavoidable, a lot of merchants are going “outside the box” (figuratively speaking) to improve their returns game.

Nothing personal, just straightforward business calculations:

1. During the peak season, Amazon now offers a longer return period. For the 2022 Holiday Season, most of the items purchased between October 11 and December 25, 2022, can be returned until January 31, 2023.
2. A well-known cosmetic e-commerce company, Beautylish, has a 90-day return policy without asking why a customer wants to return their order.
3. Powered by Alibaba, Lazada lets customers return items to merchants or through their platform as long as the return request is filed within 15 days (for LazMall items) or 7 days (other items).
4. Zappos offers its customers a very generous 365-day return policy. Additionally, they offer a ‘Rapid Refunds’ service as part of their VIP program, where refunds are issued as soon as the courier scans the package.

Also, big companies like Walmart, Target, and Amazon are thinking about replacing returned products with the ones they still have. They will not only save money by shipping a return to a warehouse, managing the items at the warehouse, reselling them, or sending it to a liquidator, but they will also increase consumer loyalty.

What is the solution for SMB?

What can a small or medium-sized firm do in a situation of increasing expenses and competitive pressures? Damn, that’s a good question! It is a truth that small and medium-sized firms cannot compete with megacorporations in this area. What is left to be done in this situation? Be flexible, as you always should.

First, consider how your return, storage, and resale expenses have risen. Perhaps this isn’t your principal issue. Everyone starts small and then grows as they grow. When you have a large number of clients and your revenues are so great that a few returns are insignificant, you can relax your return policy. When you can manage returns, you may provide a generous return policy; if you can’t, don’t be afraid to set strict limitations.

Are the customers who return your purchases repeat customers? If you answered yes, they are most likely cheating your system. Are all of the consumers returning the same items? (This might be the major problem, and you may need to put  things on hold to decrease returns and refunds.) Are the majority of your returns due to faulty merchandise? If this is the case, you may consider changing your postal carrier or using better packing for fragile products if you package and ship them yourself. 

It is best to make it clear in the return policy that refunds and returns are only permitted under such and such conditions if you want to avoid this issue (loss of earnings from returns). Customers won’t have an issue with your return policy if the regulations are reasonable, straightforward, and well-written.

Take steps to stop people from sending items back, like writing accurate product descriptions and choosing and packaging items carefully. Keep in mind that a limited number of returns is normal. When this happens, keep clients updated on the status of their return. Prevent return fraud by using online store credit rather than cash returns. If managing reverse logistics in-house is getting too expensive, consider outsourcing it.

The return process is a critical component of the customer experience, and it determines whether the client stays with you. And keep in mind that happy clients are the best advertising money can’t buy.