Retailers are starting to consider a ‘returnless’ return policy in cases where the cost of receiving the return is more than the cost of the actual merchandise. Smaller, cheaper items that are expensive to ship would be kept by customers while they still receive a refund. Fuel prices and supply chain turmoil are the main reasons such a policy is under consideration. While Amazon adopted this process several years ago, Target, Walmart, Gap and Urban Outfitters are now considering updating their policies. They reported in their latest earnings results that they have an excess of inventory and it’s expensive to store it.
Why is it important?
A returnless policy results in savings for the retailer if the product is worth less than the courier costs, including shipping, handling, and restocking fees. The expense associated with processing returns is ‘about a $30 project just on average. So if the item costs less than $30, it’s really hard to justify figuring out what to do with it, as opposed to, say, “Just keep it,”’ said Jan Kniffen, CEO of retail consultancy J Rogers Kniffen Worldwide. This policy also offers convenience and improved customer satisfaction. Recent research from Dotcom Distribution showed that more than 50% of online shoppers in 2022 said the experience of a returnless refund made them want to purchase from a brand again while 34% said it makes them want to donate unwanted items. It’s possible this trend could persist and be adopted by a majority of retailers in the medium term.
What can businesses do about it?
Retailers need to perform rigorous research in order to assess whether such a policy would be beneficial overall. Just because it works for a big retailer such as Amazon does not necessarily mean that it would work for your business. However, depending on the size of your organisation and what you sell, this returnless policy could differentiate you from your competitors. It is important to bear in mind though when considering adopting such a policy that you may encounter bad actors or scammers.
By Faeeza Khan
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Image credit: Karolina Grabowska