Published on: December 21, 2011by Kate McMahon
This is the time of year when retailers have to deal with a simple reality. Make returning products easy and pain-free, and consumers may well reward you with sustained loyalty. However, if you make returning products too easy and pain-free, and people may actually return products. Even before Christmas.
I hate to sound like the Grinch here, folks, but amid all of the hype about the 2011 holiday shopping season’s big opening weekend comes news of a distressing trend. That would be the mid-December return rate, as many of those early purchases are being turned back into stores before ever seeing a roll of wrapping paper or a spot under a festive tree.
The Associated Press last week reported on the increase in buyer’s remorse, citing second thoughts by shoppers who binged on big discounts between Black Friday and Cyber Monday, and competitors undercutting each other on the hottest items. That sweater or iPod case that was a bargain on Thanksgiving is a steal today.
The AP said return rates spiked during the recession and haven’t budged. For every dollar stores take in this holiday season, they'll have to give back 9.9 cents in returns, up from 9.8 last year, according to the National Retail Federation's survey of 110 retailers. In better economic times, that number is about 7 cents. The category showing the largest increase in returns was the always cut-throat consumer electronics sector.
Ironically, a major factor cited for the increase in returns was store policies actually making it easier and less costly for consumers to turn back both in-store and e-commerce purchases.
"Spurring more returns wasn't part of the plan," retail industry strategist Al Sambar told the AP.
And therein lies the dilemma.
Beyond the one-off impulse buy, ease in returns can make-or-break a consumer’s long-term relationship with a retailer. Zappos.com is a perfect example. In addition to great selections, Zappos is known for its generous 365-day return policy and free shipping both ways. And in turn, a devoted following of consumers whose testimonials and style reviews are very much a part of the Zappos site.
(While waiting in a long line at the Post Office recently, I saw a woman saunter past the queue to drop her Zappos return box on the counter, smiling as she said “And I don’t have to pay anything, right?” Those of us in line were not smiling.)
Sure, it is free and easy, but that ease means that the company is encouraging shoppers to order more than what they want and/or need and then return what doesn’t fit and what they don’t like. But clearly this ebb and flow is built into Zappos’ business plan, and is seen as one of its differential advantages.
Other examples of pro-consumer policies include L.L. Bean’s legendary “Guaranteed to Last” credo promising 100% satisfaction in “every way” and at “any time.” Kohl’s advertises it no-limits policy and even gives store credit for no-tag, no-receipt items, and Macy’s now allows up to 180 days to return many items.
One point on why this discussion is relevant to supermarket retailers. Most supermarkets are willing to take back for cash or credit anything that they sell, no questions asked. But very few go to the extent that Stew Leonard’s does - essentially inscribing that policy in an enormous boulder and putting it at the front door. I’ve always wondered why, when stores have such a consumer-friendly policy, they don’t make more of a point about it; it may be that the current environment, in which ease of return is so important to so many retailers, that it would serve them well to rethink their reticence.
I do think that user-friendly return policies pay off in the long run both in brick-and-mortar stores and e-commerce sites. No doubt that woman skipping past us at the Post Office line would agree.
What are your thoughts? What are your best and worst returns stories? Send me an email at firstname.lastname@example.org .
- KC's View: