New Data Reveals the More Flexible the Returns, the More Retained Revenue

Updated: March 26, 2024

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Published: March 07, 2024

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8 mins read

For eCommerce merchants, understanding consumer behavior and preferences is not just advantageous—it's essential. The latest AfterShip eCommerce Returns Report sheds light on a compelling trend: businesses retain more revenue when they offer more flexible returns options. This finding underscores a fundamental shift in online shopping dynamics, where the ease and flexibility of return policies are becoming critical factors in consumers' purchasing decisions.

In this article, we’ll explore how rising customer expectations reshape how merchants approach returns. This new data illustrates that flexible return options are not merely a convenience but a strategic tool for businesses aiming to minimize losses and maximize retention.

The Importance of Flexible Returns

Customer expectations have risen, especially regarding the ease and convenience of their returns experience—which can be stressful if handled poorly. Businesses are recognizing the importance of adapting to provide more convenient return options. It's not solely about staying competitive; it's a strategic decision to foster customer loyalty and streamline the return process.

This means offering more than one return method and ensuring a hassle-free experience for the customer. Whether through in-store returns, drop-off points, or at-home pickups, the more options available, the more likely customers will feel satisfied with their purchase experience.

Businesses can offer several types of return options, each with its own benefits. Some examples include:

Free returns shipping

This option eliminates any barriers for customers to return products, making the process as effortless and convenient as possible. Consumers even use free shipping policies as major decision factors when choosing where to shop in the first place. You might consider this option when targeting a specific product line or during promotional periods. It makes the most sense to do free returns when the cost of returns is lower than the potential loss of a repeat customer.

In-store returns

Allowing customers to drop off their products at physical locations creates an opportunity for additional purchases and potential upselling opportunities. In fact, recent reports found that as many as 54% of customers preferred returning online purchases in person. It also provides a more personal touch, allowing customers to speak with staff about their reason for returning an item. Being in-store allows staff to address the issue immediately, identify any potential widespread issues with the products, and potentially save the sale. 

Drop-off points

Similar to in-store returns, drop-off points offer a convenient way for customers to return their purchases. They also allow businesses to partner with other retailers and tap into potential cross-selling opportunities.

Take Aetrex for example. They are renowned worldwide for their expertise in foot scanning technology, data-infused orthotics, and comfortable footwear. They broadened return methods to offer customers more choices as part of their returns strategy overhaul.  Offering label-less and package-less drop-off services at convenient Happy Returns Return Bars has significantly enhanced customer satisfaction and increased retention rates. This specific option has enabled the Aetrex team to achieve a 6% savings on returns per drop-off. But this is just one option.

At-home pickup

With this option, customers can schedule a return pickup from their doorstep, eliminating the need to go anywhere. This method is becoming increasingly popular and provides more convenience for customers. Your team must work closely with last-mile carriers to ensure a seamless customer experience.

Green returns

This practice saves time, money, and materials by allowing customers to keep products they wish to return without needing to ship them back. Instead, businesses can offer a refund or credit while minimizing waste. Implementing this strategy is best when dealing with low-value or lightweight items, or damaged items that can’t be resold. The cost of having the item returned may outweigh the potential revenue earned from reselling it. Green returns can also provide customers with a moment of surprise and delight, strengthening their loyalty to the brand.

Return for store credit

This method encourages customers to exchange their unwanted items for something else they prefer, rather than requesting a full refund. It's a win-win situation; customers get the value back in a form they can still use, and businesses retain the purchase value within their ecosystem. Plus, this approach often leads to repeat purchases, increasing customer loyalty and engagement. Such a policy can be particularly effective for fashion and lifestyle brands, where customers might be more inclined to find an alternative product they like instead of opting for a refund.

Exchange for the same item

This method facilitates customers who have received a defective or unsatisfactory product by offering them a straightforward exchange for the same item. It simplifies the return process by directly addressing the issue, without customers needing to browse for alternatives or seek refunds. This approach can significantly enhance customer satisfaction by demonstrating a commitment to product quality and customer service excellence. It is especially beneficial for items with high individual value or when a direct replacement can resolve the issue, ensuring continued customer loyalty and reducing the likelihood of a complete return.

Exchange for any item

Offering an exchange for any item provides the ultimate flexibility for customers, expanding their options and encouraging them to remain engaged with the brand. This type of policy allows customers to find an alternative that better suits their needs, without being limited to the exact product they initially purchased. It’s an excellent way to keep the customer within your ecosystem, increasing the chance of satisfaction and further purchases. This method is particularly effective in sectors with a wide range of products, such as electronics or home goods, where customers might appreciate the freedom to choose something entirely different.

Why offering more returns options makes financial sense

An exciting trend shows that retailers providing three or more return options see a revenue retention rate increase of over 30%. This proves how crucial flexible return policies are for keeping revenue steady, even with all the challenges of handling returns.

But focusing on exchanges has also led merchants to stumble into something arguably better than retained or recaptured revenue. For the business, it means a greater opportunity to explore the customer's preferences and offer personalized suggestions, enhancing the shopping experience and building a stronger relationship with the customer. But the data is clear: exchanges lead to increased revenue through upsells.

Upselling Through Exchanges

We are seeing exchanges as a pathway to increased growth. Instead of merely returning a product, customers are more inclined to browse and purchase other items while in-store or online. 

In that report, we found that the best returns resolution mixes all involved exchanging for different items. This kept brands' revenue intact and boosted it when customers swapped for pricier items. Merchants who offered exchanges for different products saw an average increase of nearly 12% in upsell revenue.

This finding highlights the importance of using returns as an opportunity to engage with customers and build a long-term relationship. By providing a customer-centric returns experience, businesses can increase customer satisfaction, retention, and overall revenue. Without the flexibility of exchanges, this opportunity may be missed.

Fellow is an excellent example of this strategy in action. Their product line features kettles, coffee essentials, drinkware, accessories, and coffee beans. These items are often purchased as gifts. Allowing gift returns to store credit or product exchanges creates opportunities for upselling. Offering a variety of colors, styles, or product lines to customers returning gifts can potentially boost overall revenue through exchanges. But in either case, the team can retain the revenue because they have more options than just the tradition refund.

The Future of Returns

The eCommerce landscape is continuously evolving, and the role of returns is no exception. As rising customer expectations reshape the online shopping experience, businesses must adapt and prioritize flexible return policies.

By providing multiple return options and leveraging exchanges as a growth opportunity, businesses can retain more revenue, increase upsell opportunities, and foster customer loyalty. With the right returns strategy in place, eCommerce merchants can stay ahead of the competition and meet the ever-changing demands of today's customers. When it comes to returns, flexibility is key. 

Discover how AfterShip Returns enhances merchants' ability to provide outstanding customer return experiences, cut operational costs, and boost revenue.

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