Should Brands Charge For Returns?

Whether brands should charge for returns is a hot topic in the e-commerce world. Many customers now expect perks such as free shipping and free returns, but what does this mean for sellers? Will a seller see a drop in sales if they charge for returns? Or will the reduction of costs involved with offering free returns offset the dip? In this blog post, we’re going to explore the pros and cons of brands offering free returns so you can make the best decision for your business.

Information About e-commerce Returns

Firstly, let’s explore some eye-opening facts about returns compiled by eCommerce Fastlane.

• Only 49% of retailers offer free returns.

• Over 60% of shoppers review the seller’s return policy before making their purchase, and 63% expect retailers to offer returns within 30 days.

• 18.1% of online purchases are returned, 80% of which are due to product damage or breakage. Most occur in January.

• 30% of shoppers online actively overspend and return products they don’t want.

With that in mind, let’s explore the positives and negatives of implementing a free returns policy.

The Positives of Free Returns for Retailers

There are several positives for retailers who offer free returns to their customers. One of the main benefits is an increase in sales. Customers are much more likely to purchase if they’re confident they can return it if they don’t like it, or if it doesn't fit. A survey conducted in 2022 found that offering hassle-free returns is one of the most important buying factors for consumers.

A free returns policy can also increase customer confidence and improve brand loyalty. For example, not only do customers build positive sentiment from the convenience and flexibility of it, but it may encourage repeat orders. Secondly, when it comes to items such as clothes or shoes, a free returns policy also removes a barrier to purchase.

The Negatives of Free Returns for Retailers

Undoubtedly, the biggest drawback for a retailer in offering free returns is the additional cost associated with the shipping. This can affect your profit margins, particularly for large, bulky items like home appliances and electricals. Furthermore, there are costs involved with processing the return, refunding money and restocking the item. Products that are damaged may also be unable to be resold.

Sellers that offer free returns may find that customers order multiple variants of the same item to return the ones they don’t like or don’t fit. Even if buyers aren’t doing this, retailers may experience higher return rates in general. At an operational level, and especially for large retailers, managing lots of returns can have a significant impact on staffing, productivity and other processes.

Finally, many consumers and brands are conscious of their carbon footprint and impact on the planet. Any returned item adds to a retailer’s carbon footprint and must be considered as part of any ESG reporting and green credentials.

Whether or not you choose to offer free returns is a business decision you will have to make. There are positives and negatives to such a decision, and it's important to consider every eventuality before making a change to company policy.