The question of whether retailers should impose return fees on customers has been a hot topic over the past year. Frequently discussed at industry events and in conversations with retailers and consumer brands, the issue of returns—and the associated processing costs—poses a significant challenge for businesses. To shed light on this challenge, Advanced Supply Chain Group conducted a comprehensive survey of 1,000 consumers nationwide. The findings suggest that imposing return fees is not the optimal solution and offer insights on more effective strategies for handling returns.
Returns Policies and Their Impact on Consumer Decisions
Advanced Supply Chain Group’s survey reveals that returns policies play a crucial role in consumer purchasing decisions. According to the survey, 35% of consumers always check a retailer’s return options before making a purchase, and 51% search for this information when considering buying from a retailer they haven’t used before.
The top three factors shoppers consider important in a returns policy are:
Free Returns: 62% of consumers want returns to be free of charge.
Fast Processing: 58% of consumers expect returns to be processed quickly to receive a fast refund.
Ease of Return: 56% want the process of sending items back to be quick and easy.
The Risk of Charging for Returns
The survey further indicates that two-thirds (65%) of consumers would be less likely to shop with a retailer that charges for returns. Given these figures, introducing return fees appears to be a high-risk strategy, especially during the current cost-of-living crisis when consumers are more cautious with their spending.
While charging for returns might help offset rising processing costs, it could also negatively impact sales and revenue. This potential reduction in sales could prove more detrimental to a retailer’s bottom line than the costs incurred during reverse logistics.
Embracing Returns as Part of the Supply Chain Strategy
Rather than focusing on charging customers for returns, the emphasis is on optimising the returns process to achieve several key benefits. Efficiently managing returned items allows retailers to reduce losses by optimising the value of returned inventory. Proper handling of returns ensures that items can quickly be made available for sale again, preventing missed sales opportunities and enhancing stock availability. Additionally, minimising the wastage of returned goods helps retailers improve sustainability and meet their sustainability goals.
Free Returns as a Feasible Strategy
The findings from Advanced Supply Chain Group’s survey demonstrate that integrating an efficient returns process can generate significant savings, which can mitigate the costs associated with handling returns. This makes offering free returns a viable strategy for retailers, helping to maintain customer satisfaction and drive sales without imposing additional costs on shoppers.
While the idea of charging for returns may seem like a straightforward solution to offset processing costs, the negative impact on consumer behaviour and sales suggests that retailers should instead focus on optimising their returns process. By doing so, they can achieve a balance that benefits both their bottom line and their customers.
Conclusion
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