Should retailers be looking to leverage free return shipping?
Narvar’s “2021 Return Benchmarks Report” finds some retailers leveraging free online returns in a variety of ways, including to incentivize faster returns, turn online exchanges into store credit and to support their loyalty efforts.
Among the strategies:
- Free online returns for a limited time: Saks Fifth Avenue provides free returns for the first 14 days post-purchase and thereafter subtracts $9.95 from the refund amount as a return fee. Lulus, the women’s apparel e-tailer, offers free return shipping for 10 days and charges a $7 fee afterwards. Enticing early returns gives retailers the chance to restock merchandise for another sale while also limiting shipping expenses.
- Free online returns for store credit: ThredUP, the online consignment retailer, and Dollskill, the apparel e-tailer, both offer free shipments on returns but offers merchandise credit instead of a refund. Under this method, retailers still cover shipping costs but don’t lose the sale.
- Free online returns as a loyalty perk: Several retailers offer tiered policies around free shipping to provide special conveniences to VIP customers. For example, Home Depot loyalty members gain 365 days of free shipping for returns versus 90 days for non-members. In the same way, Target offers 120 days of free online returns for members versus 90 days for non-members; Best Buy, 30 days versus 15 days; and DSW, 365 days versus 90 days.
Narvar’s analysis of the return policies of 197 retailers found only 36 percent offering free shipping on returns. The perk was much more common at larger than smaller stores. Among the findings:
- Of the 11 Fortune 50 retailers analyzed, all covered shipping costs on returns.
- Of the 82 omnichannel retailers analyzed, 45 percent covered shipping costs on returns.
- Of the 104 D2C retailers analyzed, only 22 percent covered shipping costs on returns.
- Returns Benchmarks Report – Narvar
- The Ultimate VIP Return Policy Template — According to 197 Retailers – Narvar
- Has COVID-19 exacerbated online return challenges? – RetailWire
- Amazon gets more free with free returns – RetailWire
DISCUSSION QUESTIONS: What do you think of using free shipping on returns to incentivize shopper behavior and/or create stronger customer loyalty? Are there particular uses of free returns of online orders that you favor over others?