Charging for returns: solution or problem?
Miguel Nicolás
29/09/2022
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The debate is ready: is it logical to charge for returns in eCommerce? And above all: do the savings make up for the impact on sales?
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Some large companies are implementing this measure and it seems the results are not bad. In fact, Inditex already charges in more than 30 countries and does not see this as a problem. In fact, it is even considering extending this measure to more markets.
But of course: we are not all Inditex, and we should not forget that what works for one does not have to work for another.
Let's take a closer look at the chargeback measure. -
Free returns have always been a strategy
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eCommerce is in a clear phase of maturity. It is becoming more and more sophisticated, finding new sales channels, promotional formulas and complex marketing strategies.Having said all this, we must not forget what has made eCommerce begin to grow so exponentially: price, availability and simplicity. Online customers are very clear about what they expect from an online store and, just as they want fast delivery, in many cases they also consider the management of free returns to be a differential advantage.
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This makes sense since returns in physical stores have no cost as such and, in addition, in retail we can interact with the product before deciding to buy. Obviously, if we do not have an effective returns policy, we are at a disadvantage with respect to this channel.
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Problems caused by returns
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So, in a way, we have assumed that it is something we have to bear, or a toll to be competitive. But if we think carefully about what it means to us, it is a considerable problem because:
- It generates direct costs: reverse logistics represents a major detriment for many companies. Not only because of what is no longer sold, but also because of the costs involved in messaging, storage...
- We lose stock temporarily: in a return window of, say, thirty days, it can take up to a month to have the product available for resale.
- It consumes resources: we have to dedicate time from our team to manage returns, and this is so, no matter how autonomous the process is.
- Environmental implications: right now we all have a greater awareness of the carbon footprint we are leaving through our actions. Can you imagine the amount of greenhouse gases produced by that new pickup and delivery for each return?
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How can we convince the customer to pay for their returns?
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None of what I mentioned in the previous point will be new to you: surely you have already given it more than one try to optimize returns so that they cost less time, resources and are more efficient. But it is not easy.It is also not easy to implement a pay-per-return policy when it is mostly free of charge. And if there is a change in conditions, we run the risk of losing that customer who, logically, will turn to the competition that continues to provide that added value.It is possible that little by little this type of charges will become more common, but it is not reasonable to believe in a massive and coordinated modification by all eCommerce. So, if you want to start charging for shipping, you have to look for arguments to justify it.
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#1 – Sustainability
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Do not underestimate the power of this variable. Consumers are increasingly looking for eco-friendly businesses to the point of willingly paying extra to be more sustainable.Make it clear, in the store and in the terms and conditions, how inefficient the excess returns are and the environmental impact they have. But always do it in a positive way, for example, by counting the amount of CO2 saved by reducing returns.This may not make them happier with cash back, but it will make them make more reasonable use of that right.
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#2 – Free return points
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We mentioned Inditex at the beginning as one of the main advocates of this measure. They have an advantage that not all retailers have: a network of commercial establishments.
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If you also have physical stores or have a partner who can act as a collection point, you can give your customers the option of returning the products free of charge by bringing them personally to the store. In addition, it is a way to generate sales opportunities in another channel.
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What is your opinion about charging for returns? Are you going to apply it or do you think it could jeopardize your sales? Let us know in the comments and on our social networks!
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Images| Unsplash.