Zulily May Reverse Its Online No-Return Stance

Reducing consumer friction is becoming an increasingly important element in retail, and that starts with return policies.

And then there’s zulily, the online retailer who doesn’t offer returns. But that might change as the company said its testing an online returns program to determine if it should reverse its no-return stance, The Wall Street Journal reported. Zulily, a five-year-old flash-sales retailer, has used its no-return policy to help build its successful business, bringing in $1 billion in annual sales.

Zulily has a unique retail style for the fact that it sells items that it later obtains from retailers. It offers consumers limited-time goods at discount rates, which allows the company to keep its inventory levels and costs low and thus offer deep discounts.

When the company started, it was mainly after children’s toys and clothing, and those customers didn’t always care about making returns as much, the WSJ article noted. But when it transitioned to women’s clothing, the mindset of its consumer base shifted.

“I think returns are critical in apparel retailing,” Hadley Mullin, senior managing director of private-equity firm TSG Consumer Partners, told WSJ. “Customers need to be able to return items if the style and fit doesn’t work.”

Zulily began its testing in mid-May when it told a small group of consumers that it would accept returns on some goods. The “limited-time return policy,” as it was coined, was offered to random shoppers who weren’t aware it was part of a temporary test.

A spokeswoman told WSJ that the test was being done without its vendors, and there was no set timeframe to run the test. For the general public who aren’t selected for the test, they still must abide by the no-return policy as for the time being that hasn’t changed.

The WSJ article cited a figure from consultancy firm Kurt Salmon that return rates can cost retailers as much as 30 percent for online returns. But as eCommerce giants like Amazon have been more flexible with customer returns, that just might change the retail returns game.

And once more test results come in and the e-retailer sees how return policies impact sales and customer retention, will Zulily change its stance? Consumers will have to wait and see.

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