Britain has become a nation of online shoppers. An estimated £13 billion was spent online during Christmas 2014. However, according to LCP Consulting, approximately 30 million unwanted items – worth an estimated £600 million – will be returned.

It’s clear that getting your returns right is crucial, especially with the e-commerce trend in the UK set to keep growing (online purchases currently account for an estimated 20% of all retail sales across the UK).

“customers prefer to have a choice of ways to return items – drop-off, pick-up or send-in”

And returns are even more important for certain types of business: The Paypers found that the return ratio in the UK is 5–10% for electronics, rising up to 20-30% for fashion. UK consumers also prefer to have different ways to return items with 63% wanting at least two return options from a choice of drop-off, pick-up or send-in.

Free returns are a statement of confidence

Laura Morroll, Managing Consultant of LCP Consulting says: “Recent customer research carried out has revealed that the offer of free returns is perceived by customers as a statement of confidence in the brand – there is something reassuring about shopping with an online store that is sure enough about the quality of its products that it is happy to offer returns for free.”

One of the clear reasons that shopping baskets are abandoned is because of a lack of confidence in the consumer’s ability to return goods that turn out to be unsuitable. The apparel sector is a clear example here, with size stress often cited as a key reason for not ordering online: a pain point that you could instantly alleviate with free returns.

The benefits seem obvious. If you can offer a returns system and, even better, fully integrate it into your e-commerce store, it is likely your customers will show their confidence with loyalty and regular ordering.

What do consumers want from returns?

Consumers in the USA clearly reward retailers that offer a fast and convenient returns system.
Source: Endicia / Comscore 2012 Online Shopping Customer Experience Study.

Free returns drive sales

Like most e-tailers, you’ll have to take a strategic decision on who should pay for returns. According to research from idealo, 50% of European retailers currently offer free returns and absorb the costs themselves.

According to LCP Consulting’s Laura Morroll: “The majority of fashion retailers are now offering free returns as they recognise that this is one of the surest ways to increase conversion in online traffic where uncertainty in consistency of sizing and quality may previously have been a barrier. Pure play online retailers (e.g. ASOS) in particular recognise the need to offer this in the absence of a store estate where customers can touch and feel the product before buying.”

You can use free returns as a powerful marketing tool when targeting particular groups of consumers. Zalando, for instance, shout about their 100 day free returns policy on the homepage of their website. This speaks volumes to their young customers that want to be assured they can return any goods that aren’t suitable.

UK retailers are some of the most generous when offering extended returns period to their customers

Source: idealo shop study: How customer-friendly are online retailers? November 2014

You can also use free returns to build loyalty. As Katy Phillips, e-Commerce Editor at idealo UK, says: “e-tailers are certainly keen on enhancing their management of customer loyalty, and benefits such as free returns clearly play their role here – if a customer knows they have the reliable fall-back of posting back an unsuitable item at no cost to themselves then they are more likely to return to the shop and place the order in the first place. However, as well as customer loyalty, I believe that free returns and similar features are just as important in marketing and the acquisition of new customers.”

Simply by moving to free returns as part of your business offering, you could punch well above your weight across the e-commerce space. Removing the cost barrier when your customers make purchases is a powerful marketing message that won’t go unnoticed by the growing legions of online shoppers.

Free returns can set you apart

Now could be the ideal time to revisit your returns policy. Here are a few recommendations to create one that helps your business stand out.

  1. Make your returns policy totally clear. Confusion will inevitably lead to abandoned orders.
  2. Free returns will remove the last stress point that your customers feel when placing their online orders.
  3. Personalise your returns policy and systems. Your customers want to know that you care about ensuring their returns are handled efficiently.
  4. Multi-channel returning is fast becoming the norm across the e-commerce space. Offering more returns options is consistently cited by consumers as a major business differentiator.
  5. Extend the returns period above and beyond what your business is legally obliged to offer. This shows your business is confident about its products.
  6. Do your research. Talk to the customers who have returned goods and ask them about their experiences using your returns system.
  7. Partner with a trusted delivery provider that can deliver on the promises you make for returning items.
  8. Stay in touch with customers throughout the returns process. This is a massively positive way your business can show it takes returns seriously. Your customers will react with many return visits to your store.

The enormous popularity of pre-Christmas shopping dates, such as Cyber Monday and Black Friday, clearly shows that the appetite for online shopping is only going to grow. What is important to realise, however, is that the e-commerce space will become increasingly competitive. One of the major ways your business can stand out in this crowded marketplace is to not only offer free returns, but also make the whole process run smoothly.

Dave Howell is a freelance journalist specialising in business and technology. He writes for ‘Raconteur’, ‘The Guardian’, ‘Making Money Magazine’ and is the author of ‘Small Business Guide to China’ and ‘Successful e-Commerce in a Week’.

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