The Returns Economy is Here

Free shipping and free returns have been proven to increase sales lift relative to any increase in returns due to a liberal and customer centric returns policy. 

Yet many retailers still choose to deploy returns prevention tactics to the contrary, and they pay the price. Just look at some of the retailers that have succumbed to the intense competition of online retail - Nastygal, JackThreads. Did their returns strategy play a role?

Maybe, maybe not. But it is difficult to ignore the numerous customer complaints on site jabber and ResellerRatings that included a returns experience with the retailers.

Companies that embrace free returns, but are not prepared with a robust reverse logistics process will eventually change course and implement gatekeeping methods to lower returns rates. (Hint: if your CFO made the return policy, this is you). This is in self preservation interest, but it will not help fend off the inevitable.

Modern retailers understand the value of being genuine, transparent, and truly customer centric. It shows in the product choices, site design, and customer service policies. It can't be faked, at least easily. The benefit is loyal repeat customers. The kind that BaubleBar has cultivated. (Look how they turned a negative returns experience into building brand loyalty).

Call it what you want, but customers definitely understand the relationship between price and value. And when this relationship tips in favor of the retailer, customers are more likely to feel disappointed, and the retailer pays the price with high returns and high customer churn.

Customers understand that price is what you pay, value is what you get.

Did a 30% return rate force ModCloth to sell out to Walmart?

Maybe, maybe not. But there are some signs they crossed the value to price ratio.

Like it or not, the returns economy is here and the advantage goes to the retailers that leverage data to optimize their product returns strategy.

Ironically, all retailers have this data and thus have the ability to deliver what customers want. A positive shopping experience, end to end. And if you think about it, isn't that a reasonable expectation?

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Peter Sobotta

Co-founder & CEO @ReturnLogic

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Credit to site jabber for the reviews and Pexels for the image.