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Re-thinking Returns: Providing a Better Experience to Boost Sales

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What’s your attitude toward customer returns? Considering the impact returns have on online businesses, you should celebrate and welcome them.

Returns aren’t a new phenomenon, but something that has been normalized by the continued growth of online shopping and the rise of the preferential consumer. In an industry that’s more competitive than ever and with shoppers demanding retailers improve their capabilities, embracing returns could be the difference between survival and failure.

Having a returns process might be a legal requirement, but retailers need to offer more than the bare minimum. Returns are one of the most important parts of the customer experience, and retailers that are brave enough to go the extra mile will see increased purchases and customer loyalty. Those that don’t could see their customers snapped up by more dynamic competitors.

In May 2019, Klarna commissioned more than 2,000 interviews with U.S. shoppers to take a fresh look at their attitudes toward returns. Here’s what we found:

Embracing returns will boost customer loyalty and your bottom line

Retailers are increasingly concerned that the cost and challenges of managing returns will damage their bottom line. However, despite the massive growth in online shopping, consumers still want to see and feel their items before they decide to keep them. Seventy-five percent of shoppers say free returns are an essential factor in their choice of retailer. And 44 percent said if a retailer has free returns it means they are more likely to shop at that merchant again. It’s clear that embracing returns not only attracts new customers, but also encourages them to spend more, boosting customer lifetime value for retailers that get returns right.

Retailers that fail to offer a beneficial returns experience—with expensive policies or friction-filled processes—risk losing customers in the long run. Seventy-seven percent of shoppers say they would not come back to a retailer if they’ve had a poor returns experience.

Emerging trends: fast-fashion and false expectations

The past 10 years have seen an explosion of fast-fashion retailers entering the market, and the rise in returns—in part—is driven by this growth and high demand. Increasingly, convenience-driven consumers are using their sitting rooms as fitting rooms to try before they buy, and return the items they don’t want to keep. Essentially, a simple mirroring of the in-store experience in the comfort of their own home. This rise in online shopping has created a growing gap between what shoppers expect when they buy an item online and the reality of what they receive. This can lead to a further rise in returned items from shoppers who are disappointed by their purchase. What they see isn’t always what they get.

Thirty-four percent of shoppers returned items because they ordered the wrong size, while nearly a quarter of shoppers returned items because they were faulty or damaged. The number of shoppers returning items because they simply did not like it when it arrived is 22 percent.

Getting it right will take care of total value

Our latest research confirms that shoppers are frustrated with shipping their returns, both with the cost of it as well as the inconvenience. Forty-five percent of shoppers would be most likely to seek out and shop with a specific online retailer if they were able to buy online and return at a physical location without having to print a label and repackage the item. Women are more frustrated by shipping and handling costs than men (36 percent vs. 26 percent).

Savvy shoppers want payment choice. At Klarna, we’ve seen the positive impact that letting shoppers pay later has on the shopping experience. Because they have more time to pay, enjoy and try their goods, the urgency is lessened, which means they’re more likely to keep their products. Seventy-two percent of Americans feel that a feature that allowed them to pay for only the items they keep from an online purchase would be valuable to them, with nearly one third (31 percent) saying it would be “very valuable.” U.S. shoppers are interested in alternative payment options, such as installments, with 45 percent saying they have not tried before, but are interested.

Returns continue to be an integral part of the shopping journey and customers are demanding retailers listen. They want increased flexibility, seamless processes, and a variety of options tailored to their preferences. Now it’s up to retailers to step up to the plate.

To learn more about Klarna, visit Klarna.com.

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