What Consumers Truly Think of Returns
Returns are a necessary evil in the world of e-commerce retail.
While frequent returns can adversely impact your profit margins, they also serve as a great opportunity to boost customer loyalty if handled correctly. With over $368 billion in sales lost to returns last year, developing and enforcing a comprehensive returns policy is no longer something that retailers can put on the back burner.
With this in mind, we have partnered with Rakuten Insight Global to take a closer look at consumer preferences on e-commerce returns. How and why are consumers returning their purchased items? What does an “ideal” returns policy look like? Are “free returns” still a thing? Let’s find out!
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Damaged Items, Ill-Fitting Items and Items that Do Not Match the Product Description Are the Top Three Reasons for Returns
E-commerce returns are increasingly common today, with the most frequently cited reasons for them being ” item is damaged or defective” (71%); “item does not match the description” (54%); and “item does not fit” (47%). Comprehending the rationale behind returns (and refunds) can allow retailers to develop policies that can keep their return ratios in check, whilst reducing the risk of friendly fraud chargebacks. Furthermore, identifying the root cause of customer dissatisfaction unveil potential areas of improvement for businesses like multi store e-commerce platforms, consequently helping them improve customer loyalty and retention down the road.
71% of Consumers Demand Free Shipping for E-Commerce Returns
While retailers are not legally required to have a return (and refund) policy, there are good reasons to put one in place. From the list of products that are eligible for returns, to the timeframe within which a store accepts returns, a comprehensive return policy not only prevents fraudulent returns but also encourages consumers to place their trust in a particular brand. In fact, UPS has reported that “68% of online shoppers verify a website’s exchange and return policy before they make a purchase.”
When asked what they would like in a returns policy, an overwhelming majority of the participants answered “free shipping”. With reference to Rakuten Insight’s findings, 52% of shoppers would be willing to buy more items and 33% would come back for repeat purchases if free returns were offered. In the meantime, 53% of the same group found cash refunds desirable, 31% of them wanted status updates for returns (by e-mail or SMS) and another 30% would like the availability of a return pick-up service.
Returnless Refunds Appear to be the Most Popular Mode of E-Commerce Returns
It is no surprise that a whopping 80% of the surveyed respondents prefer to “receive a refund without having to return the item”. In the same questionnaire, 59% of them revealed that they would rather “return to a designated drop-off location (i.e. parcel locker), while 45% would rather “return in store”.
Returnless refunds is a concept that was first introduced by Amazon in 2017, with the intention of cutting down friction and additional expense associated with returns. Contrary to popular belief, returnless refunds can actually provide a number of benefits for both sellers and consumers. On top of eliminating the hassle of going through the lengthy returns process, returnless refunds would also mean a shorter time to resolve product issues, which will in turn boost customer satisfaction in the long run.
Between the costs of shipping, warehouse storage, product inspection and customer service, returns themselves can be a huge financial strain for retailers. According to Optoro, it cost 66% of the price of an item for retailers to process a return in 2021– up from 59% the year before. In the cases where the cost of processing returns outweighs the potential revenue of reselling a product, it makes more sense for retailers to send out the refund and let customers keep the goods.
The State of E-Commerce Returns in 2022 and Beyond
Returns management is certainly not easy, and given the rapidly-changing retail environment, it is hard to tell what the future holds for e-commerce returns. Having said that, with the right policies and investments in place, offering returns can be an effective way for retailers to demonstrate their commitment to exceptional customer service, while simultaneously helping to control expenses and plan their inventory in a more efficient manner.
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The Rakuten Insight Global survey contained 4 questions, each of which provided valuable insight into consumer preferences regarding return policies. The survey was conducted online among respondents from Rakuten Insight proprietary panels in April 2022. There were more than 65k participants from seven markets, namely Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, and the US.
About Rakuten Insight Global
As Asia’s trusted research partner, Rakuten Insight Global has remained at the forefront of consumer market research data collection in the region for over 25 years.
Our online panels have been developed throughout 12 major Asian markets & the US, all of which are managed by dedicated local support teams and meet the highest standard of the industry. The team at Rakuten Insight Global offers 24-hour coverage from 11 worldwide locations, providing exceptional service for our over 500 clients across the globe.
Rakuten Insight Global is tasked with leveraging the membership assets of Rakuten Group for market research purposes. Having access to such a diverse and unique group of research participants allows Rakuten Insight Global to remain at the forefront of online research in the region