A Return Experience to Remember

Returns are on the rise. A combination of rising prices and tighter budgets means that shoppers are returning items more often than they have in some time. It’s a swing of the pendulum as online shopping soared to meteoric heights during the pandemic, with e-commerce seeing a 31 percent increase in growth from 2019 to 2020. To encourage online shoppers to keep coming back for more, many businesses implemented lenient return policies during this period, which included free shipping on returns.

Fast-forward to today and the inflation-driven changes in the global economy have consumers more wary of spending money, especially on items that turn out to be not quite what they had expected. The result is a shopper searching for that refund as quickly and as easily as possible.

Businesses are embracing various strategies to deal with this increase in returns. Some of the most well-known brands have begun to charge a fee to return items. Another interesting approach gaining steam is quite the opposite. Brands are now asking consumers to keep the items they don’t want while also issuing them a refund, in an effort to keep growing mountains of returned merchandise at bay.

What’s interesting is that over 90 percent of customers make repeat purchases based on a company's return policy alone. How can brands create a personalized approach to returns — ensuring they appeal to their entire customer ecosystem?

Optimize the Shopping Experience

The first place to start for e-commerce sites is to ensure the shopping experience is as seamless and transparent as possible in order to reduce the likelihood of a return. For instance, it's imperative that every product listed is as pictured. Make sure the images of the product properly reflect what the item is. Ensure sizing and descriptions are as accurate as possible. Do what you can to make sure the order is correct going out the door, reducing the need for a return for a mistakenly sent item.

Different Options for Different Shoppers

Vary the refund options based on the lifetime value of the customer requesting one. For example, first-time customers pay shipping to return their merchandise for a refund. Loyal, repeat customers can be provided with different options, such as free returns or a free return pickup.

Loyalty Programs Kick in for Loyal Customers

Brands can use loyalty program tiers to reward top tier members with the best returns options, making it desirable for new customers to complete the activities and purchases needed to reach this level. Think experiences and experiential rewards that make your brand stand out. Start with the most valuable customers. This ensures that they feel recognized and rewarded while providing an example for those who have yet to join the program.

Help Retailers Clear the Shelves

Brands can also embrace creative thinking when it comes to moving excess inventory that comes as a result of returned items. Businesses can think of fun and innovative ways to help their customers take ownership of their unwanted stock. For example, Nike has its own website, Nike Refurbished, “that extends the life of eligible products by taking like-new, gently worn and slightly imperfect kicks, refurbishing them by hand and offering them to select Nike stores and locations for resale.” This keeps inventory on the move and gives new life to items that can be reused.

With rising inflation and soaring costs, brands are looking for ways to optimize the return process, or reduce the number of returns. With creative thinking combined with customer incentives, some of the issues surrounding increasing returns can be averted and used to convert one-off shoppers into repeat customers.

Charlie Casey is CEO and co-founder of LoyaltyLion, a data-driven loyalty and engagement platform that powers e-commerce growth.