Retail

Returns Come Back To Haunt eCommerce Amid Pandemic

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In the best of times, returns are the bane of eCommerce existence. In these worst of times, they’re even more complicated as return policies are all over the map due to the COVID-19 crisis and consumers who have amped up their eCommerce spending. With the retail industry sliding into Mother’s Day in just a week, the return issue is bound to raise its head.

Some stats around the issue show just how substantial it is for retailers. These are pre-crisis numbers, but according to Global WebIndex 56 percent of all apparel and shoes are returned, with electronics taking second place at 48 percent. On average 25 percent of all eCommerce purchases are sent back; 30 percent of shoppers deliberately over-purchase and subsequently return unwanted items. And if a retailer charges too much (or charges at all) 57 percent of millennials will bail on future business.

Now add a pandemic. According to March 2020 data from Narvar and Forrester, 42 percent of retailers have already paused their pickup in-store and return in-store services. Some 40 percent of respondents said they have relaxed their return policies, while fewer (27 percent) said it’s something they’re considering. For online shopping the return policies range from Amazon (90 days) to Target (varied and depends on product). One thing is for sure: retailers should expect returns to increase dramatically as retail brick-and-mortar reopens.

“Whether retailers change return policies formally or informally, return policies are now being calibrated to the situation,” said Liesl Chang, co-founder of returns solution Cricket. “And there will be a shift to seeing returns as a responsive, customer service tool. ... Retailers will start to understand that returns shouldn’t be a static, one-size-fits-all program but tailored to the circumstances, similar to the best CRM. Hopefully, retailers will use this as an opportunity to capture the right data and get more strategic about their returns.”

The pandemic has added revenue and expense stress to the issues around returns. Larisa Summers, SVP of marketing and eCommerce at returns technology company Optoro says that due to more relaxed returns policies (free shipping, no restocking fees, longer windows), store closures and supply chain disruptions, retailers are finding themselves with higher volumes of returns and excess inventory. In addition, many are strapped for cash: as revenues plummet, retailers are unable to cover their remaining costs.

On the flip side of the negative consequences, when returns are done properly, it can become a loyalty building experience.

“Retailers should do everything they can to win loyalty during this time,” Summers says. “Outside of shipment speed, retailers can look to returns to build goodwill with customers. This can look like more flexible return policies to encourage purchasing in the short-term and alleviate customer frustrations throughout the returns experience. According to an Optoro consumer survey, we found that typically 97 percent of shoppers would continue to shop at a retailer/brand if they had a positive returns experience. Retailers need to consider the holistic customer journey and identify areas that can compensate for challenges being faced in the forward supply chain during this unprecedented time in retail.”

A new study from Carnegie Mellon University found that liberal return policies can result in an improved customer experience, especially for omnichannel retail. But it warns against making it too easy as it could undermine profit.

“Our work is a first step in capturing the complex dynamics that motivate different firms’ choices surrounding return policies,” explains Leela Nageswaran, Assistant Professor of Operations Management at the University of Washington, who co-authored the study. “Return policies can be a valuable tool for firms with both stores and online sales, especially when firms use them to sway customers’ choice of the way they return items as well as how they purchase products.”

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