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December 6, 2023
Should Retailers Embrace ‘Keep It’ Return Policies?
According to the “Returns Report: 2023 Holiday Predictions” report from returns services firm goTRG, 59% of surveyed retailers are offering “keep it” policies for returns that aren’t financially viable to ship back this holiday season, up from 26% a year ago.
The survey of over 500 U.S.-based retailers found that the tactic is especially common for low-cost items as the expenses of shipping and processing often surpass their worth. Of the retailers surveyed, 27% deem items priced up to $20 as suitable for “keep it” — also called “returnless” — policies.
GoTRG added in the study, “This strategy not only curtails logistical expenses but also bolsters customer loyalty and trust.”
The increased use of “keep it” policies comes as retailers have been increasingly charging fees for returns, incentivizing in-store returns, and taking other steps to reduce the escalating costs tied to online returns.
The “keep it” practice gained attention in 2017 when Amazon.com introduced “returnless refunds” as an option for marketplace sellers. At the time, Amazon said the feature was “highly requested” by sellers wanting to avoid the time and cost of managing returns shipping and processing for items that would be hard to resell. Processing returns can often range between 20% and 65% of the cost of goods sold, according to UPS.
A survey from returns technology provider Narvar found that 75% of customers have been offered a “keep the item” return at least once in their shopping lifetime, and “most frequently cite Amazon, Walmart, Target, Wayfair, Chewy, Kohl’s, and SHEIN as common benefactors.”
Of the respondents, 90% who received the perk had previously shopped with that retailer and appreciated the trust expressed through the policy, while 65% appreciated that retailers are saving their time and effort by letting them keep the return. On the flip side, 53% expressed concerns that unethical customers will abuse the “keep it” policy and drive up prices for everyone, while only 50% liked that retailers were saving costs and reducing their environmental impact through the policy.
Discussion Questions
Do you see more pros than cons in “keep it” return policies by retailers for certain items? How would you structure such a program to limit abuse?
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This strategy simply underlines the problem that many returns are economically detrimental to retailers. Allowing customers to keep items may be less damaging to the bottom line, but there is still an impact of essentially giving away products for free. Of course, this can be viewed as the cost of doing business online, but that doesn’t solve the underlying issues. Retailers need to get better at resolving the reasons returns are made – inconsistent sizing in apparel, lack of product detail, poor pictures, etc. The other issue with ‘keep it’ policies is one of moral hazard: it could encourage people to abuse the system or think less when buying products. That said, most retailers have enough data to weed out abusers and serial returners.
I think it wise to acknowledge the moral hazard issue – tho maybe immoral hazard would be more apt – but I wonder if it wouldn’t be even wiser to give it more weight. It sounds uncomfortably like the “don’t prosecute shoflifting, it’s not cost effective” line…and how’s that going ?
When it comes to profit killing returns costs for retailers, something has got to give. “Keep it” returns policies are a practical, but imperfect way to reduce cost, minimize environmental impact and create a satisfier for loyal customers. There’s no doubt that some customers will take full advantage of “keep it” policies, and retailers will need to police these carefully. Monitoring returns behavior to weed-out abusers by disallowing returns beyond a limit over a period of time is a blunt, but reasonable approach. “Keep it” programs do provide some cost relief for retailers as well as time/effort savings for customers, but the real challenge is minimizing returns in the first place.
Ah, the joys of ecommerce. A necessary evil, obviously, but it’s simply an untenable business model. Imagine starting a new business today with this as your investor pitch: “Our customers will have literally limitless choices at their fingertips, so we’ll have to be very aggressive with our prices. And also we won’t be able to charge them anything to ship the products. Oh, and if for any reason they are unhappy with their purchase, we give them their money back and let them keep the product. So, sure, we won’t make any profits on individual orders, but don’t worry: we will make it up on volume!”
It’s all madness. Perhaps we can “rationalize” the madness if we stop looking at websites as our biggest stores and instead begin looking at them as marketing expenses.
“Keep it” returns policy is an economic reality that belongs in an online retailer’s customer experience toolkit for all the good reasons mentioned in the goTRG survey. Retailers know which categories tend to have higher returns. They can make the purchase decision more accurate through better product information, precise and easy-to-use sizing charts, and augmented reality. Also, through the massive data, retailers can easily separate the serial return abusers from the rest of the customers. The “keep it” returns policy is effective only when designed with foresight and executed with intelligent feedback loops that adapt and learn over time. During the peak holiday season, time and resources dictate a focus on delivering orders rather than picking up returns that clog up supply chain flows and suck up profit dollars.
The ‘keep it’ concept is but a finger the dyke of misguided returns policy. It is the lesser of two evils (retailer pays the expense of shipping and processing returns or retailer gives away the product) but it is not how business should work.
Returnless returns? This is a job for algorithms. Yes, returns have become a huge enemy of a healthy bottom line for retailers—especially online only brands. For multichannel and omnichannel players, at least there are options that can add incremental store visits that can lead to impulse buys. But the “keep it” option is definitely not a one size fits all solution.
Back to the algorithms, retailers should be including lifetime value of customers, returns logistics, SKU resale potential, and many other factors in their decision to offer “keep it” to a customer. Theft is and will be a problem for returns fraud. Serialized RFID tags can help.
What will also help is addressing the returns problem before the purchase. Use new tools like size and fit helpers to cut bracketing for clothes items. Improve item descriptions and reviews filtering to give shoppers a better idea of what they’ll get if they buy. Long story short, look at returns—or the option to return—as part of the item’s life cycle and go from there.
It comes down to math. Keep the tire; ship back the notebook. It’s about determining the opportunity cost–is it worth the labor? the trucking? the restocking? the environmental impact?
Is the concern that customers will say they’re not keeping something and then keep it? That they sell it on eBay? I’m not sure it matters in the global scheme of things.
Like everything else, the policy needs guardrails, but in fact, I have worked for retailers who were told by their suppliers when they received an overage “just keep it or throw it away.” So it’s not what I’d call unheard of.
They’ve done the math, and it’s cheaper to just have the consumer throw it away. I wonder, though, how it’ll be accounted for in the books? A return or a sale? Will returns seem to plummet? Online returns really aren’t going away. This is one solution for low-end product.
A “keep it” returns policy maximizes ease and convenience for consumers, protecting loyalty. Retailers skip the hassle, effort and expense of reverse logistics, freeing up staff to serve customers.
It’s an expensive sunk cost for retailers to incur.
Retailers need to know their numbers and apply a “keep it” policy to only select merchandise. They also need to pinpoint and restrict shoppers who abuse this policy.
The “keep it” practice solves one problem — the excessive costs of handling returns — but creates another: Customers who are less than trustworthy are essentially getting something for nothing.
Any ecommerce company following this practice had better do the math before allowing “keep it” on items where a physical return makes more sense. Just as important, the companies’ reverse logistics operations need to be just as cost-efficient as the rest of their supply chain.
If you build ecommerce, they will come, just make sure they can return products as conveniently as they purchased them at “no cost.” We rightfully made this bed because we wanted to build the online world and it’s hard to argue that we should just shut it down. If the problem is costly returns and the abuse of “keep it” policies, then maybe there’s an option to employ selective “keep it” policies targeted at items or price points or specific customers or something that makes more sense than a blanket “keep it” policy. Why does it have to be so black and white; embrace the “gray!” Marketers have become adept at segmenting and maybe “returns” should be treated similarly. Finally, I don’t accept that “keep it” policies build loyalty. Is it possible that protecting your loyal customers who don’t abuse return policies builds more loyalty than increasing your prices to reward those that do?
It’s a good idea, but as some have already stated, it will need to monitored carefully to identify those that abuse the system and spoil the fun for everyone that else.
While the benefits of this policy are clear, the opportunities for fraud are vast and a bit frightening in my view. The key continues to be how and when is this policy utilized, likely on small ticket and consumable products. Constant monitoring of utilization by category, and by individual shopper, leaves open the possibility of effectively using this tactic in certain scenarios…but with caution to be sure.
This is a horrible idea, an idea rooted in, “the realpolitik” of business costs (in tribute to the life of Henry Kissinger)-this makes absolute sense on the balance sheet.
On the customer journey and brand value side, it is a HORRIBLE decision. It would be better if items below a certain price range were sold as “no returns allowed” OR perhaps allow for a return if the customer came into a store, saving the shipping. That incentivizes customer visits and saves dollars while also saving a bit on waste-which should be part of the messaging.
There. Mischief managed!
Yes. For certain categories & customer profiles, the “keep it” strategy makes sense. Rules within the algorithms that manage the offer should decide whether a product & a consumer make sense to “keep it”. Customers that return a high % of items should be accounted for in the algorithm because it may be less desirable to offer “keep it” as an option. In the end the goal is still to deflect as many returns as possible with great service & accurate product information.
While this policy can be just as beneficial to the retailer as it can to the consumer, this concerns me from a sustainability standpoint. I know Chewy encourages pet owners to donate the food they want to return to local shelters. Retailers need to find a way to enforce the circular bit of it beyond encouraging it.
Embrace…??? Hell no. Utilize…as quietly as possible…??? Sure. Sometimes the math is compelling. But it’s not that simple. The data quickly identifies problem categories, products and customers. Problem categories and products can be treated with a “no returns” policy. Questions…???…visit a store. No local stores? Sorry. Sometimes the math and the logistics won’t lend themselves to being able to offer every product under the sun by way of ecommerce. Retailers can of course make the eyes open decision to use this policy in the name of customer acquisition/retention/loyalty. They can then make the decision to not be abused. They can say “no returns”. They can charge for returns. This does not have to be a hand wringing exercise. There will be ample data to sort it out.
The convenience and reach of ecommerce is amazing. And some of the inefficiencies are becoming legendary. Profit driven decisions will butt heads with marketing and customer service decisions. And the battle between profit and sustainability will continue for some time to come.
All the pros are listed in the article.It’s easy for the customer. It fosters a sense of confidence and loyalty. That’s what both customers and brands want. However, there will be those who abuse the system. Like anything in business, we must measure the abuse. Is it worth punishing all the honest people for the sins of a few? (Rhetorical Question)
It’s a very slippery slope, and as others have noted there’s an algo out there waiting to look at this one. I wonder if the (chat supported) return dialog needs to go something like this. “We’re sorry our product didn’t meet your needs. To make it right we’d like to offer you a 50% discount or ask you to donate this to your favorite charity, or to (last resort) 1 drop it back in our store, 2. send it back, or 3. keep it with our compliments for being a loyal customer. Keep it was at the end of that list for good reason.
It’s pretty obvious that “keep it” return policies offer a win-win scenario for both retailers and consumers. For retailers, the expense of returning low-cost items isn’t worth the expense of shipping and processing returns, plus there is a reduced environmental impact and strengthened shopper loyalty. For shoppers, it’s more convenient and reduces the need to figure out sometimes complicated return procedures.
Obviously, this approach can be abused, and bad actors might work the system to get something for nothing. Retailers need to develop mechanisms to detect fraud to offset this risk.
Overall, embracing “keep it” return policies represents a progressive and sustainable approach to customer service, offering tangible benefits for both retailers and shoppers.
An appropriate modern day oxymoron, “Returnless Returns,” The saga continues regarding return policies which satisfy customers, but do not break retailers’ backs. No doubt the issues of customer convenience & satisfaction need to be addressed in terms of what is feasible. Regarding returnless returns, figure out the system but don’t punish the honest customers.
The benefits of “Keep It” as a strategy are many – operationally, financially and from a customer hassle standpoint. But it won’t be perfect for every retailer.
The keys to deciding are, run the math on cost/time, calculating backward from the customer, in who touches an item, how many touches and for how long, and all operational processes. Then, look at the upside in sales/profit opportunity. Every team member has finite time in maximizing company growth and experiences – helping customers shop, merchandising, optimizing store conditions, making customers happy.
All in all, in many cases, the feared “costs” in letting customers keep up items are soon recaptured in favor of opportunity and upside. Of course, keeping an eye on a few repeat offenders is always a good additive to keeping programs tight.
Keep It (with apologies to Michael Jackson):
We told them, “Don’t you ever shop around here”
“Don’t wanna see your clicks, you better disappear”
But the items on their stoop show their aims are really clear
So keep it, just keep it
Don’t send it back, we’ll let you do what you can
Don’t want it in our shop, or on the cargo van
Reverse logistics are tough, so we avoid what we can
So keep it, but you wanna be bad
Just keep it (keep it), keep it (keep it)
No one wants to ship repeated
Keeping those items free is your plot
It doesn’t matter, honest or not
Just keep it (keep it)
Just keep it (keep it)
Just keep it (keep it)
Just keep it (keep it)
The problem with helpful solutions like keep-it return policies is that there are people who dedicate their life to gaming the system and this policy is literally a freebie. Fortunately, this is not most people.
While there is always risk that a few will spoil the benefit for many; today, most consumers appreciate this good-will building policy. And, any retailer who can eliminate a trip to the post office during the holidays is an instant hero.
For certain, the long-term cost/benefit of keep-it returns will still need to play out and, it has to remain economical for retailers. Then, benefits may also extend into environmental responsibility and customer loyalty. Not a bad hand for retailers who can make this policy work.
Personally I struggle with this because if it does not go back and you don’t want it you may just bin it – in which case it ends up in landfill!!!!
Equally when you send something back you have very little perspective on what happens to it – I recall sending stuff to Amazon where it was clearly faulty – they asked for it back, it is not something that can be repaired – so what happens? It may well end up in landfill – even after there being an additional cost associated with it being shipped back.
I do believe people were more careful with their purchases when returns were more difficult – I have not seen any evidence of this but it does seem logical. If there is a chance you will not need to return something you may be even less careful with your purchase!!
“Keep it” return policies offer clear benefits for retailers and customers. They save retailers the costs involved in returning low-priced items and promote environmental conservation and customer loyalty. On the customer side, they simplify the return process. However, addressing fraudulent behavior is important, and retailers must establish measures for mitigation. In our experience, “keep it” return policies showcase a sustainable approach to customer service that benefits everyone.
In my opinion, the increasing adoption of “keep it” return policies by retailers offers notable advantages. These policies can curtail logistical costs, foster customer loyalty, and build trust. The strategy is particularly beneficial for low-cost items where return shipping expenses may exceed their value. However, concerns arise regarding potential abuse by unethical customers, impacting prices for everyone.
To structure such a program effectively, retailers could implement clear guidelines, perhaps limiting the frequency of “keep it” options for individual customers. Additionally, educating customers about the environmental and cost-saving aspects of the policy may enhance understanding and reduce misuse. Striking a balance between customer convenience and preventing abuse is key to a successful “keep it” return program.
The rise of “keep it” return policies aligns with the rising costs associated with online returns, including fees and incentives for in-store returns. I agree that this approach, where shipping and processing costs often surpass the value of returning low-cost items, not only reduces logistical expenses but also builds customer loyalty and trust. However, it’s important for retailers to carefully structure these programs to prevent abuse. Ideas to do so could include monitoring returns behavior and setting reasonable limits, ensuring these policies create both customer satisfaction and long-term business viability.