Analysis

Opinion: Why offering free returns is an ecommerce no-brainer

Whether to offer free returns is emerging as a contentious issue for retailers. We recently published an op-ed by Gary Rohloff of Laybuy putting the case against. Now Tobias Buxhoidt, Founder and CEO of parcelLab explains why he believes the pros far outweigh the cons.

It’s understandable why returns are viewed as a nightmare by many online retailers. It involves chalking off a sale and refunding money. The process takes up valuable selling time. And if you offer a free returns policy, it costs money.

However, to smart retailers, offering a free returns policy is a no-brainer – and here’s five reasons why every retailer should embrace it.

1. It will attract customers

Some 67% of online shoppers will check an ecommerce website for its returns policy before making a purchase (Invesp). If they can’t find one or don’t like what they see, they are likely to shop elsewhere. This means it’s important to have a clearly defined policy that can be easily understood by shoppers. And the better the deal on offer, the more shoppers are likely to buy from you.

2. It sets you apart from the competition

There’s so much competition in the ecommerce space right now that the more you can do to stand out the better. If you offer a simple free returns policy, then you can be sure that none of your competitors will be offering a better one, while many are likely to be offering something worse. This means you’ll be more competitive. So make sure you shout about your free returns policy so shoppers are aware you’re offering it.

3. It drives loyalty

A free returns policy can be expensive – in fact some figures suggest returns cost UK retailers £60 billion a year. But this is offset by the fact that if shoppers are happy with your policy, they are likely to come back and buy more stuff from you. And no less than 58% of customers want a hassle-free no questions asked returns policy. This means giving them carte blanche to do what they want with purchases and simply hand them back. This does pose a risk on the retailer’s part, but it’s all about ‘playing the long game’. If your company is easy to do business with, even in the face of something contentious, word will spread.

4. It could save you time and effort

The fact that a free returns policy increases customer loyalty, meaning you’ll retain more customers, also saves on marketing. This is because it costs five times more to acquire a new customer than to keep an existing one. Furthermore, smart businesses also prioritise acquisition over retention because it’s almost 60% easier to sell to existing customers than new ones. And as mentioned in the previous point, if you build a strong reputation as a fair retailer that’s easy to do business with, you’ll gain word of mouth recommendations and your customers will do your marketing for you.

5. It opens up a marketing channel

If you’re going to offer a free returns policy, then it pays to keep your customers informed of the progress of the return, from the goods to the refund. This not only keeps them happy, but also opens up an opportunity to market to them through your updates. A nicely designed, branded message can be an excellent way of showcasing your brand. You might also include a link to your company’s latest blog post, plus details of upcoming promotions or events, which can drive new sales.

So rather than being an expensive imposition to retailers, handled in the right way, free returns make perfect ecommerce sense.