But a restrictive return policy can hurt your business far more than it helps it. A customer-oriented return policy , on the other hand, may be worth losing sales because you'll gain the loyalty of those customers in the long run.
In this article, we will discover:
How Return Policies Impact Stores
How to Write a Return Policy That's Good for You and Your Customers
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How much money do retail stores lose from product returns?
For many retailers, returns are a frustrating expense. Returns cost the retail industry over $100 billion annually , and only 5% of those returns are due to defects. As long as customers are buying products, some of them will be returned, even if the item in question is not defective.
In addition to lost sales, returns can result in having to pay for cleaning or reconditioning of items. There’s no guarantee that returned items will sell a second time, especially if you’ve restocked during the time it took taiwan contact number the customer to return the item. You may end up having to sell it off, which will hurt your ROI in the end.
A customer-centric return policy helps build customer loyalty
But here’s the thing: That returns process you hate? Customers often hate it, too.
If your returns policy frustrates your customers, you risk eroding their loyalty. A study conducted by Capgemini found that 75% of customers believe retailers need to do more to improve the returns experience .
More than half of customers are willing to abandon their purchasing process due to bad return policy experiences, even if they were very loyal before.
Charging for returns, whether through shipping fees for online returns or restocking fees , can send a message to customers that they can't trust you to put them first.
If you try to discourage mass returns – that is, people who buy products only to return them after one use, or not at all – by imposing restrictive return deadlines and conditions, you will end up discouraging honest customers as well.
But the opposite seems to be true for retailers that have flexible return policies. Doddle’s survey found that 86% of customers believe a positive return experience would make them more likely to shop with that retailer again. It’s perhaps more accurate to think of return policy expenses as marketing spend, not lost sales. By offering customers an easy and flexible way to return their items, you’re investing in an increased likelihood of repeat business.
Given the sheer number of customers unhappy with returns policies, there’s a clear opportunity to differentiate yourself from the competition. Customers want free returns, but they’re not getting them. In the cosmetics industry, for example, only 21.8% of online retailers offer free returns.
If more than half of your customers abandon a retailer because of bad returns policy experiences, you can attract those customers with a policy that puts them first. These customers are valuable: they can spend up to 140% more after having a good returns experience.
Of course, not every business is able to implement a completely open return policy. It’s not easy to implement a 365-day return policy, without providing a reason, without being exploited. However, you can try to find a balance between the expense of your return policy and long-term customer loyalty.
How to establish a return and exchange policy for your store that is beneficial to you and your customers?
It's clear that taking a close look at your returns policy and tailoring it to benefit both you and your customers will help your business in the long run.