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Ecommerce transformed the return.
Online shopping by necessity meant that returning a good required mailing it, rather than sending it back to a store. But the change was about more than logistics.
As they sought to center the customer and provide a reason to choose online over in-store, online retailers introduced friendly return policies that often allowed shoppers to send back items for free, and spelled out clear instructions. In part, this was designed to ease concerns about potential drawbacks of shopping online: If an item that looked great on the web didn't meet expectations in person, a person could feel like they were essentially stuck with it. With free returns, however, the decision wasn’t as fraught, and the process of sending it back had less potential hassle. It broke down a barrier to making a purchase, and in turn moved more people to the buy box.
To be sure, however, there was a tradeoff. Someone had to bear the cost of the returns, and often that was the brand or retailer that sold the items. Yet the flexibility of making post-purchase try-on and evaluation of a product part of the process of buying an item had a bigger impact: It helped to improve the shopper experience of ecommerce.
As these policies became more common, customers adjusted their expectations. Returns were on the checklist of elements considered even before a customer decided to buy an item. In a 2018 UPS study, more than two-thirds of shoppers said they check an ecommerce website’s return policy before making a purchase.
Now, there's a clear understanding among brands and retailers, said Aaron Schwartz, president of Loop Returns, a returns platform that works with Shopify brands like Allbirds, Chubbies, Brooklinen and others.
If customers don’t see a clear and generous policy up front, they will choose to shop somewhere else that does. On the other hand, if returns are cumbersome after a purchase, a customer won’t shop with a brand again.
In turn, this meant that returns became an area where brands and retailers could win the satisfaction of consumers, and even convince them to buy again.
A process that once happened mostly out of view was suddenly front and center within the customer journey.
“The best brands understand that returns are not a cost center,” Schwartz said. “Returns can be a connection point with customers.”
Aaron Schwartz. (Courtesy photo)
Schwartz saw the value of these connecting points firsthand. While running a DTC watch brand, he wrote notes by hand to every customer, and included them with shipments. Through thousands of notes, the gesture reflected how building a bond with customers and creating community was important to him. But in the process, it was also a chance to get feedback about the products, and improve them based on what customers said.
Over time, Schwartz saw how the returns process was similarly an area where feedback could be gathered. Using Loop’s solution, customers tell brands why they are sending an item back. That provides context about sizing, fit and other elements. This information can in turn be put to work to assist with merchandising.
Customers can also choose what they want to do with the product. Rather than send back a return, they might want to exchange it for another purchase from the same brand, or credit. Or, they may want to drop off an item in-person. More recently, as concerns about environmental sustainability and the call to extend the life of goods grows, there have been more requests to donate an item, or rout it to a resale platform.
That ability to provide options is increasingly meaningful amid the economic swings of the last three years.
Returns rose right alongside ecommerce during the pandemic. In 2021, the return rate jumped to 16.6% from 10.6% in 2020, according to the National Retail Federation and Appriss Retail.
As a result, brands and retailers were seeing more returns than ever. With ready access to capital and a priority on growth, they continued to process them, just as they sought out new customers and kept orders moving out the door.
Over the last 18 months, however, life got more difficult. A period of supply chain headaches gave way to fuel costs going up, which in turn raised the cost of shipping and other logistics costs. Capital is no longer flowing as easily. Now, many retailers are facing a glut of inventory as the supply chain bottlenecks finally ease up. Add to all of this that customer acquisition costs are going up, consumers are getting more price conscious as inflation rises.
The recent tightening has put a focus on building loyalty among consumers, and being operationally efficient, Schwartz said. Every customer that is added becomes more important to retain. In turn, the revenue earned from every purchase those customers make is important for brands to keep, rather than having it sent back along with an item that now must again move through a supply chain.
It has brought a new willingness to explore different return options. Seeking to control costs, brands and retailers have also rolled out changes to return policies. The fast fashion retailer Zara is testing a policy to charge for returns at dropoff points. On the other end of the continuum, retailers told CNN they where considering giving people their money back and asking them to keep returns so as to avoid more congestion in their logistics networks.
Whether retailers ultimately choose these options or others, the point is that brands and retailers are rethinking long-held policies. With that, the information they have and the tools to collect and analyze it becomes increasingly important as they seek to understand what customers want, and how they can best serve them. Having options to provide to consumers can help them retain revenue, while still providing a great experience.
With shifts in focus, metrics also change. As Schwartz put it, there’s now been a realization that sustainable growth matters.
“Brands are not just looking at the short-term,” he said. “They’re looking at the lifetime value of the customer.”
That focus is necessary now, and it will continue to be important if a period of rapid growth returns. Continue to factor post-purchase interactions in as a part of the shopper experience, and the chances of that lifetime extending will grow.
Trending in Shopper Experience
First, there was BOPIS. This partnership between Amazon companies signals the rise of BORIS.
Two Amazon subsidiaries are teaming up to provide customers with more return options.
The news: Footwear and apparel-focused ecommerce platform Zappos.com is launching a new returns service that allows customers to turn items back in without a box or label. Plus, returns can be dropped off in-person at Whole Foods Market stores nationwide.
How it works:
Customers start a Zappos return process through the company’s system. If it qualifies for dropoff, they will see the “Label Free Box Free” option populate in the menu.
Items can then be taken to a Whole Foods Market location in the original packaging, without a box.
Customers drop off an item at the customer service desk or return kiosk at a Whole Foods, and show the return code to an associate.
Key quote from Zappos.com CEO Scott Schaefer: “Being a customer-first company is in Zappos' DNA. As our customers' needs evolve, we evolve with them to ensure we're exceeding expectations…With Label Free Box Free Returns, we're excited to not only be better serving our customers, but also to have found a natural partner in Whole Foods Market.”
A returns pioneer: Any return innovation from Zappos is notable, given its place in creating the norms of ecommerce policies that are frequently used today. Even before it was acquired by Amazon in 2009, Zappos pioneered free shipping and free returns. These soon became widely standardized practices for a new generation of digital brands and retailers that were focused on creating a great customer experience, and easing processes for shoppers who couldn’t touch and feel an item before they bought it. Zappos still has a return policy that stands out: Returns are still free, and can be shipped from anywhere in the U.S. within 365 days of purchase.
Today’s returns conundrum: The new partnership comes as brands and retailers are facing dueling priorities when it comes to returns. For one, they want to continue creating a great customer experience, especially as logistics innovation opens up new options. At the same time, returns are piling up. The return rate for the 2022 holiday season grew 63% over the prior year, Salesforce found. This challenges the capacity of logistics systems to process returns, and it can also eat into profits that are already being pressured by a tough macroeconomic environment.
How this partnership provides an answer: Let’s break down Zappos’ new service:
For the customer, box-free and label-free returns reduce hassle. Customers don’t have to find a box and pack it in order to send an item back.
Dropoff also adds ease. In one sense, Whole Foods dropoff does add a step for the consumer, as it requires them to bring an item to a location. But in the context of every day life, it can create a measure of convenience. Dropping off a return at the grocery store saves a trip to the post office or store. This can help customers to combine errands. We already have BOPIS, or Buy Online Pickup in Store. A new wave of returns dropoff is ushering in BORIS, or Buy Online Return in Store.
For Zappos, which is the retailer, there are a number of logistics advantages. The dropoff saves a step of having to rely on carrier pickup. The company can consolidate returns at Whole Foods locations, and plan routing accordingly. It also gives Zappos branding at Whole Foods stores, which could help the company stand out in customers’ minds when they go to make a future purchase.
For Whole Foods, it gives people another reason to visit stores, where they may be likely to buy a grocery item while they are there. Zappos is helped in this case by its alignment with Amazon, which also has returns dropoff at Whole Foods. Dropoff of sneakers and apparel is another way that Whole Foods is growing beyond its core business of selling grocery items to becoming a hub of activity under Amazon’s orbit.The bottom line: With pickup, box-free and dropoff policies being adopted, there’s a new wave of returns innovation taking shape. Zappos wants to continue to be on the forefront and this partnership will help. For more examples, check out The Current’s recent look at new policies from Amazon, FedEx and DoorDash.