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Jonas Hagströmer Theodorsson

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Free returns and why it's a must in your 2020 e-commerce

E-commerce | 5 min

Fast shipping and a 30 day open return policy are not enough for today’s shoppers – and haven’t been for many years. Free shipping, free returns and even same-day refunds are probably the first things every retailer must have in clear order to be able to keep a competitive edge in 2020.

This is how to tackle those challenges!

Returns are a challenge for most e-commerces


While e-commerces have changed consumer's shopping behaviour, customers are now more dependent on generous returns and exchanges, since one cannot see or feel the products before purchase. Intentional returns are increasing with people buying the same shirt in three different sizes, only to try them on. Returns like this are not preferred by any retailer – cutting conversion rates and attacking profit margins; a major threat to the business if there ever was one.

More workers, warehouse space and new departments only handling the extensive processes of e-commerce returns are keeping companies from developing their business. According to a report from Inbound Logistics, the average retailer spends 8% of total sales on reverse logistics – taking back damaged, unwanted, spoiled, or counterfeit goods.

But the reality is, as always, that e-commerces have to adapt themselves after the consumer's behavior to keep a competitive edge, and not lose customers.

Simple and free returns are the new normal – and crucial! – to a customer’s shopping experience, affecting their whole attitude towards your brand, as well as their customer lifetime value.

Tip! Watch Keywordio and Google webinar on how to use Life Time Value


“Our best customers have the highest returns rates – but they are also the ones that spend the most money with us and are our most profitable customers.”

- Craig Adkins, Zappos’ VP of Services and Operations

The ecommerce return policy is crucial for most purchases


The absolute majority, about 70%, of shoppers will check your return policy before buying from any retailer. Therefore, free returns are often an incentive for the customer to buy, knowing that it won’t be any hassle or extra charges if the product wasn’t to their liking. With free returns, shoppers get the same experience as if they were to return the product in a physical store – easy and not requiring anything extra from their part rather than visiting that store once more. This is why a return shipping fee will keep the majority of customers from buying from you.

Return policies also tend to be vast with complex terms and conditions, making it difficult for customers to understand – which is also something that will keep them from buying from you. A clean and simple return policy that the customer can read and understand in less than a minute will help reduce confusion and misunderstandings – and at the same time build brand trust. And, of course, increase conversion!

smart-returns

Just free returns won’t be enough further down the road


Even if you offer free returns and have a clear return policy – don’t rely on it carrying your e-commerce throughout all of 2020.

Not only do your customers need to know that they can change their mind regarding a purchase, but they also need to feel that their money is in safe hands, and that they will be refunded in an uncomplicated, fast way. A seamless return process is not complete without a smooth refund – and here, time is a crucial factor that highly affects the customer’s whole experience. Know that their shopping doesn’t end with sending back products! Free returns will not be enough if you have to wait 2 weeks to get your money back – and that’s why e-commerces need to step up their game regarding same-day refunds.

Learn more about smart refunds from Keywordio event with Trustly.

Increasing the speed of refunds will also lead to the customer starting over and make a new purchase faster, where they won’t have to sit and wait for their money back. Over 50% of customers will also start shopping more frequently if the whole return and refund process is faster.


Your customer’s lifetime value depends on their shopping experience


By offering a smooth and easy return policy – including free shipping, same-day delivery, hassle-free logistics and same day refunds – you’ll notice how customers will continue coming back for more. When interacting with your e-commerce is as easy as browsing around and buying from physical stores, people will keep shopping from you.

Having simple return processes will affect the initial purchase decision, as well as have an impact on how consumers feel about your brand. It will also enhance their long term loyalty.

When calculating what your cost for free returns or same-day refunds might be – always keep your customer’s lifetime value in mind. A new return policy could be part of your retention marketing strategy!  Find out more about how to leverage Life Time Value of a customer from our event with ReDeal

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