Hassle-Free Returns are Key to Successful Online Sales

August 25, 2015


Make no mistake: return policies are all-important for online retailers, according to an analysis from Granify, a software-as-a-service consultancy.

Granify analyzed 2.8 million shoppers and 894,000 transactions, and concluded that a strong return policy was THE most important decision-making factor in many retail categories, including home building supplies, jewelry and accessories, and apparel. Social proof—convincing testimonials about products—was second. Price came in third.

UPS Pulse of the Online Shopper, a 2014 study that comScore conducted for UPS, revealed that 66 percent of shoppers review a return policy before ordering a product. Fifty-three percent will add items to a shopping cart to qualify for free shipping. Eighty-two percent react positively to the opportunity to return a product to the store or ship it back using a free, prepaid label.

Clearly, your return policy is a large reason why potential customers will—or will not—hit the “buy” button.

With that in mind, it’s wise for online retailers to institute a hassle-free return policy with free return shipping and no restocking fees.

This is a big leap of faith for etailers, who know that customers will likely return one-third of the products they order. Today’s shoppers will buy multiple products in several colors, styles and sizes, choose the ones they want and return the rest.

For smaller etailers, such a liberal return policy may seem cost-prohibitive. The truth is, you can’t afford not to do it: if customers don’t like your return policy, you’ll likely lose the sale to a company that does offer a consumer-friendly return policy.

In fact, studies show that, in the long run, free returns will increase your profits. A study led by Amanda B. Bower, a professor of Business Administration/Marketing & Advertising at Washington and Lee University in Virginia, followed two large online retailers over 49 months. The study revealed that customers who paid for their own return decreased their spending at that retailer by 75 percent to 100 percent over two years. In contrast, returns that were free to the consumer resulted in customers spending 158 percent to 457 percent above pre-return spending.

You might have a stellar website, active social media campaigns, and easy checkout. But if customers are frustrated by your return process, that’s going to leave a bad impression.

Amazon and Zappos’ generous return policies have had a positive impact on their thriving businesses. In fact, Zappos’ most loyal customers are also the ones with the highest return rates.

So what must an online retailer do? Make sure the after-buying experience is as simple and easy as the buying experience.

  1. Put a link to your return policy in a prominent place on your home page. Don’t make customers hunt for it. Treat it as an integral aspect of your unique value proposition.
  2. Clearly communicate your return policy. Let customers know what products they can return, whether they get a full refund or store credit, how long they have to make a return, and if return shipping is free.
  3. Offer a flexible window for returning items. Thirty days is good, 60 is generous, and 90 is outstanding.
  4. Encourage further sales by offering free return shipping. And make it easy on customers by including a prepaid return shipping label in the package.

With ShipStation, you can create return labels to accompany your shipping labels. It’s easy to do: when you place your order, open the Order Details popup. Under Other Shipping Options, check the box for “Include a return label with the outgoing shipping label.” You can even specify a carrier, service and package. You can apply the rule to all of your orders or to a specific subset by visiting Account Settings, Automation Rules. Be aware, however, that ShipStation only supports domestic return labels.

Note that return labels count toward your monthly shipment limit, even if they aren’t used. Additionally, UPS has a $.50 return label fee for unused return labels.

Remember: two-thirds of buyers review your return policy before making a decision. Implementing a free, no-hassle return policy can go a long way toward persuading your prospects to hit the “buy” button and become loyal, longtime customers.