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Report: Easy Returns Yield Loyal Customers

The runaway success of online sales is a double-edge sword: On the one hand, it’s robbing physical stores of their foot traffic. On the other, it’s giving executives something positive to tout as the retail sector continues to melt down.

Though the e-commerce sales numbers are impressive, what’s not usually highlighted is the flipside of online shopping: the wave of goods that end up back in stores when consumers no longer want that impulse buy or feel duped by the enticing photos and descriptions on the retailers’ site. The National Retail Federation reports an increase in online returns of 52 percent from 2007 to 2015 to $260 million.

Read more about the costs associated with returns: E-Commerce: Sales Driver & Margin Killer?

Whatever the reason for these returns, they’re creating major logistics and accounting headaches for stores. But Narvar, a post-purchase experience platform, said returns can also represent an opportunity for retailers who make them easy and friction free. To provide insight into how consumers make buying decisions, the company conducted a survey of 677 online shoppers in the U.S.

The why behind returns

Nearly half (48 percent) of those surveyed have returned an online purchase in the last 12 months. And some of those returns were pre-planned. Forty percent of consumers said they’ve purchased multiple items with the expectation that they wouldn’t keep everything—a practice called bracketing. The research shows that apparel shoppers are using their homes as fitting rooms since clothing results in the highest percentage of this behavior with 48 percent of respondents admitting they do so.

“Bracketing is most common in categories like apparel and home,” Navar noted. “This behavior is led by some of the most desirable cohorts: affluent shoppers, under-30 millennials and women.”

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Though returns are a challenge for stores, which then have to figure out what to do with this influx of goods, they also give them the chance to create loyal customers. Practically all respondents said that if a store provides great returns service, they’re likely to shop there again. Eighty-two percent of shoppers who return items are also repeat shoppers of the retailer, and 40 percent of them replaced the item from the same retailer. Only 17 percent went elsewhere for a replacement.

“High value customers are also the most likely to utilize the returns process,” Navar points out, adding that new customers especially, require superb post-purchase service to entice them to shop again. “Proactive communication about refund status and tracking notifications for returned packages go a long way to improving customer satisfaction.”

On the other hand, unhappy returners are three times as likely to abandon a retailer.

Shoppers feel so strongly about the return process that for 49 percent, it’s part of their decision making process when they’re considering an online purchase. And, there are a host of things that could turn them off: Those charging a restocking fee can pretty much forget boosting online sales. For 83 percent of those surveyed, that would be a deal breaker. Stores that don’t offer free returns don’t fare much better: 74 percent of consumers won’t shop at stores that do. Other impediments for consumers: short time limits for returns (less than 30 days, for most), requiring a return authorization, and not being able to simply drop it off at a store.

While the average return rate across retailers is 12 percent, 43 percent of shoppers surveyed say they’ve returned clothing items, giving apparel the highest rate. Dissatisfaction over size and color drove 70 percent of clothing returns. For comparison, only 11 percent of those surveyed say they’ve returned shoes, and 12 percent have rejected electronics.

The where of returns

The good news in all of these products flowing back to retailers is it presents an opportunity to prop up their ailing brick-and-mortar locations. More than a third of shoppers (38 percent) said they’d prefer to return in store. The reasons: 47 percent said it’s simply easier and 35 percent like that they can receive credit for the merchandise immediately. And the advantage for stores is of those who do return in store, 28 percent do so with the intention of shopping for something else.

Read more about the challenges related to e-commerce: Retailers are Feeling Boxed In by E-commerce Returns

At 27 percent, apparel shoppers were the most likely to return in store. Compare that to just 16 percent of footwear consumers and 5 percent who have purchased consumer electronics.

The younger the shopper, the more annoying they find the online return process. Almost half of shoppers (48 percent) ages 21 to 29 say online returns are a hassle. That’s double the number in the 30 to 44 age group who feel the same way. Further, 55 percent of those ages 21 to 29 find in-store returns easier, while only between 41 percent and 46 percent of older respondents feel the same way.

Fifty-three percent of those surveyed have even kept an item instead of jumping through the necessary hoops to return it. Shoppers report finding it especially cumbersome to have to get a return authorization and to hunt for a box in which to mail the item. What they want is to kept in the loop of the return process and to get updates on the status and when their refunds will be issued.

Amazon and returns

No shopping survey would be complete without the Amazon yardstick.

Seventy-five percent of those who’ve shopped on Amazon reported being happy with returns for goods purchased there. That’s a high rate given that they also say returns made via the site can be onerous. For instance, 74 percent say they needed a return label, compared with 41 percent of consumers who shopped elsewhere. Similarly, 41 percent were required to acquire a return authorization versus only 28 percent who shopped other stores.

But, what keeps them satisfied overall is that the online giant is very good about communicating throughout the process. For instance, compare 45 percent who were informed about the status of their refunds on Amazon versus 25 percent on other sites.

“Other retailers can play offense by making it clear their process is better than Amazon’s, and also by making more of it self-service,” Navar advised.