Free Online Returns: Once The Exception, Now The Rule

The online path to purchase has come a long way since the first digital retailers opened up shop, but there are still plenty of gaps in the process for both customers and merchants. However, just as on-demand delivery services are starting to combat brick-and-mortar retailers’ traditionally faster fulfillment timetables, some merchants have gone all in to address another bane of online sales: product returns.

The Wall Street Journal reported that more and more online retailers have started to think of free shipping on returns as a standard cost of doing business with modern consumers. Chris Dunn, business development specialist at TrueShip, told The WSJ that the perspective shift on the part of retailers over the past several years has been nothing short of palpable.

“There’s been a notable change in attitudes,” Dunn said. “…In years past, retailers weren’t all that receptive to it, they were thinking that by not offering, people will not return [their orders]. They’re starting to realize that you’re still going to return, and you’re not going to buy from that retailer again.”

Why the sudden change in tune, especially when a survey also conducted by TrueShip found that nearly 33 percent of all online purchases end up being returned? Offering blanket free shipping for all of these customers would add a large expense to any retailer, which means there must be some kind of upside to such a display of consumer-friendly policies, right?

Part of the shift might have to do with the resultant bump in consumers’ shopping attitudes given the option of free return shipping. TrueShip found that 80 percent of shoppers remain loyal to merchants that offer them free and streamlined return services. However, a poor consumer experience with returns will lead 82 percent of them to spend their money at competitors.

Does this mean that the industry has taken an irrevocable step over the free-return-shipping line in the sand? Satish Jindel, president of SJ Consulting Group Inc., told The WSJ that it could be a fluid system. As long as retailers are able to offer free return shipping in a way that minimizes costs, they’ll have an incentive to do so. On the consumer side, Jindel explained that shoppers should keep going back to merchants with free return shipping as long as the increased costs aren’t being passed on to them.

Jeremy Bodenhamer, CEO of logistics automation firm ShipHawk, told RetailDive that whether companies are looking into no-minimum free returns or some kind of hybrid model, time is running out to decide.

“When the retailer figures out these unknowns and finally knows what these costs are consistently, ahead of time, they can then make that decision about free or subsidized shipping,” Bodenhamer told RetailDive. “Then it’s a rational decision.”

The industry-wide push toward free returns as standard service is coming at a somewhat uncertain time for retail freight carriers. Multichannel Merchant reported that FedEx and UPS both updated their prices for the holiday shopping season, and the changes could result in a 250-percent increase in premium fees for overnight and express shipping options. Between paying out of pocket for free returns and shelling out for higher carrier rates, some retailers like Sara Henderson, founder of BOGO Bowl, told The WSJ that her business is feeling the squeeze from both sides.

“It’s frustrating,” Henderson said. “They give you discounts for being a regular shipper, but they seem to make it up in others ways by putting all these little fees here and there.”

Whether it’s enhanced logistics or retail tech advancements that help retailers out from under a rock and a hard place, online merchants need something that helps them protect their bottom lines while still giving consumers the seamless return processes they want.