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Do free returns policies hurt your shipping budget?

Dec 27, 2019 7:45:00 PM

Returns may be free for the customer, but not for the shipper. Here’s how your shipping policy can be optimized to keep both sides happy.

E-commerce has given a boost to many businesses’ bottom lines, but this growth comes with a caveat — the rise of “return anything” culture. Online shopping, delivery and pickup have made it easier than ever to ship items back to the sender, and millions of consumers are doing just that. UPS predicts 1.6 million returns during the week before Christmas — per day.

The total dollar amount that returns cost retailers year-round varies between sources, but the National Retail Federation expected that figure to be $400 billion in 2018. That’s a lot for businesses to handle and crafting an optimized returns policy could make all the difference in how your share of those returns colors your bottom line. Here’s the right way to craft (and promote) a policy to limit the damages and potentially increase revenue in the long run.

How your current returns policy may be costing you

Unhappy customers will get in touch fast if they’re looking to return an item. Any time of year can see back-and-forth emails and phone calls become a costly time sink, let alone the mad rush of winter holidays. Then there’s the time and expense of reshipping replacement items. Lastly, there’s the social media element to consider — if your customers must jump through hoops over returns, you can bet they’ll complain about that publicly on social media and in your public reviews.

One way to sweeten the returns process for customers is to offer free shipping. A huge 79 percent of consumers want free return shipping, 68 percent check a retailer’s returns terms before making a purchase, and 58 percent want a no-questions-asked returns policy.

The good news is that 92 percent of customers will buy something again from your business if returns are easy. This means that only eight out of 100 shoppers wouldn't buy from you even if the returns process is great. That's incredible statistic for you (the retailer) to bank on!

Another look at that 92 percent retention rate shows that as much of a hassle as free returns may be initially for your business, they can become an amazing long-term investment in customer retention. If your current returns policy isn’t free, your shipping department may want to consider making that change.

As for those negative social media reviews about drawn-our returns processes, they can become positive free advertising when your returns policy is free and easy. An article by Consumer Affairs highlighted that while 84 percent of Millennials don’t trust advertising itself, they do trust each other. People listen to peers more these days, not brands, so free and easy returns can become word of mouth marketing that pays off in the long run.

Basic features of a hassle-free return policy

Since over two-thirds of shoppers check your returns policy before making a purchase, you must make sure the policy is clearly worded and prominently featured on your website. Clear wording includes covering key areas such as:

  • Setting the time limits for returns or exchanges
  • Specifying what condition the item must be in
  • Listing any products exempt from returns
  • Easy-to-understand details of how to use your refund policy



Here’s a good example of a basic return policy’s wording that can be altered to suit your business needs. Absolute clarity is essential. If your returns policy has foggy language, this will lead to customer misunderstandings, bad relationships and shipping budget overruns thanks to avoidable returns.

An optimal returns policy can be facilitated by providing a returns-only email, webpage or phone number where customers can quickly arrange a return via a member of your team or by printing out their own return shipping label.

Following all the steps we’ve mentioned so far should put your returns policy among the best. However, there’s one more returns hurdle your shipping budget must clear.

71lbs can relieve the pain of returns

Page 8 of the USPS Reverse Logistics Report listed damaged deliveries as one of the four major reasons for returns, and they rightly point out that the multi-step returns journey adds uncertainty, extra touchpoints, and additional transportation costs from carriers. This is when keeping a close eye on carrier performance around the clock really pays off.

It’s the responsibility of your carrier(s) to keep your goods safe on their way to the customer. Not doing so — and getting away with it — means the inevitable returns will hurt your shipping budget. 71lbs automated monitoring watches FedEx, UPS, DHL and USPS for eligible damages during handling so we can get you a refund on the cost of shipping.

There’s a lot more we can do to heal your hurting shipping budget, so connect with us at the link below to help make savings the only things that keep coming back.

At 71lbs, we focus on two things: a) helping customers save money on shipping, and b) helping customers understand their shipping costs. We provide you refunds and savings on shipping insurance, freight and imports, among other items. Our automated dashboard displays easy-to-understand shipping costs and insights so you can make better business decisions. Drop by the contact page to get in touch!

Topics: Returns Policy, Shipping Budget, Shipping

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