The End of Free Online Returns in eCommerce?

by Sam Paternoster

The Boohoo return policy is about to have a dramatic shift, becoming the latest online retailer to begin charging for returns. Boohoo returns will now cost £1.99, and this could be even more expensive if customers fail to return their unwanted items in a single package.

Free online returns has long been a feather in the cap of many online stores. When you're making an online purchase, it encourages you to buy more than you need knowing that you have the flexibility to return what they don't need. Buyer habits emerge such as purchasing multiple of the same item, but in different sizes or colours, enabling them to try on different items, find what fits or suits them best and send back the remainder.

Retailers have long tried to make the returns process as simple as possible: it's common to see a self-adhesive returns label included with orders, removing the need for a customer to print returns labels off themselves. Alternatives to this include logging your return with a local Evri Parcelshop, Collect+ drop-off point  or other returns provider, meaning they can print the label for you and it can be collected in bulk.

Charging for returns seems to be a departure from the strategy which makes returns painless for the customer...so what's the future for eCommerce returns, and is paid returns the way forward?

Fast fashion retailers are perhaps who we can most expect this to affect - it could be argued that this is the industry where you're most likely to see a large volume of returns. This could be why fashion retailers seem to be the first ones making the move towards charging for returns.

Boohoo are not the first fashion retailer to start charging for returns - Next have introduced a £2 fee for returns, and Zara brought in a similar policy back in May with a £1.95 fee per package for their postal returns. So with big names like Boohoo, Zara AND Next making this change to their return policy, it seems inevitable that this shift is likely to continue.

This isn't to say, however, that this is destined to befall all retailers. The ASOS returns policy is staying the same, and took a pretty definitive stance against charging for returns. They recently had this defiant banner at the top of their homepage encouraging customers to avoid retailers who charge for returns, and to shop with them:

This is a neat marketing move, but there is some genuine weight to this - customers DO love free returns, and that positive perception of their brand can translate directly into sales. As online shopping has shifted to our primary method of buying new products, free returns has become the norm, and as such, people's expectations have shifted.

Research from Klarna found that 84% of shoppers said a poor returns experience with a brand would stop them from making further purchases with them. One report suggested that free returns encourage customers to spend up to an astonishing 357% more. Of course, this metric varies based on different product categories, but the potential is huge.

It's tricky - there are obvious benefits to free returns, but businesses are suffering in an increasingly bloated online market, and applying a charge to returns is a great way to counteract your losses. So how do you make the call for your online store?

eCommerce Returns Management Solutions

Charging for returns can seem like a double-edged sword. Of course, there's financial gain, but the perception of your brand may suffer, and you may lose out to brands like ASOS, who aggressively market the fact they're sticking to free returns.

Thankfully, returns management solutions aren't quite as black and white as either charge or don't charge - there are plenty of ways you can strike a balance.

  • One way to kick off is by segmenting who pays for returns based on different reasoning. You could, for example, allow logged in members to receive free returns, but people checking out as a guest do have to pay the premium.
  • Another great example of this is segmenting by reasons for product returns. It's worth remembering customers return items due issues with the product itself, such as if it doesn't arrive in perfect condition. Your returns portal should be able to account for this, as customers won't be happy if they're charged to return a faulty item. Ensuring your returns portal has segmenting functionality also gives you the flexibility to charge or not based on your own factors too.
  • Consider offering exchanges as a free alternative to charging for a refund. This ensures the customer still has the opportunity to change for a different size, colour etc., meaning less jeopardy for the customer if they order something that isn't 100% right.
  • You could also offer free returns as an upsell - that may sound strange, but for frequent buyers, it may be worth their while to pay a monthly fee, rather than paying per return.
  • If you offer home collection for returns, try and incentivise them to drop it off at a local collection point or parcel locker - this means the returns logistics are easier and more eco-friendly.
  • A good returns management platform could actually reduce returns by having built in help guides to interpret and provide solutions to any issues that customers may be having with the product. By stopping the need for returns, you’re saving everyone time and money!
  • If you're changing your policy, be transparent. Customers will find out at some point, so it's best to be honest with them. Consider sending out an email warning before any changes to your returns policy. There may be initial annoyance, but it's better that they find out from the get-go rather than when they go to make a return.

Are paid returns the future of eCommerce?

Time will tell if charging for returns will be a masterstroke in recouping losses in a bloated marketplace, or cause mass exodus towards brands like ASOS who have committed to free shipping. Experts warn that more are likely to follow Boohoo, Zara and Next, but it's worth remembering that you don't have to fully commit one way or another.

There are a lot of returns platforms out there for eCommerce businesses, whether you're a Shopify store killing the eCommerce game or a bedroom seller trying to make your mark. Have a look through different options and see which gives you the flexibility to achieve what you want with your returns management, whether that's charging for all returns, keeping them completely free, or somewhere in the middle.

Here at Shiptheory, we're in the process of rolling out our own returns portal, to help our customers with their returns management. You can find some information here to see if our returns management solution could be right for your online business!