Pros and Cons of Free Returns Policy
At ReverseLogix, we’re proud to offer intelligent, flexible reverse logistics software for a variety of businesses. Our RMA management app and software has helped numerous businesses streamline this entire area and see major profit increases, including those with a wide variety of returns policies.
One such policy that some of our clients have emphasized over the years? A completely free returns policy. This policy is enacted with the idea that customers will be more confident in their purchases, and more trusting of a brand, if they know they have the ability to return the product free of any additional charge.
Retailers find both pros and cons in offering free merchandise returns. Let’s look at some of each.
- Research supports it: Various studies over the years have found a connection between a free returns policy and increased spending at those vendors. One study, conducted at Washington and Lee University, found that average spending increased at a huge rate after a free-return policy was instituted. On the flip side, when customers were forced to pay for their own shipping as part of the return, purchases fell between 74 and 100 percent.
- Customer opinions: This is one of the more obvious pros of free returns – customers absolutely love it, and absolutely hate having to pay for any part of the return. A huge percentage of consumers rate this as an important factor for where they choose to shop.
- Competitors: Nearly 60 percent of retailers offer free returns shipping, and this number goes up during the holidays. If you aren’t doing it, your competition is.
- No an “either-or” situation: If you find major issues with some area of free returns, know that many vendors have had success placing small limitations on it. Maybe free returns are restricted to certain categories, offered only to loyalty members, or only offered during certain busy seasons.
- Consumers taking advantage: Free returns will indeed encourage some portion of the consumer population to try and take advantage of you through practices like using an item once or twice before returning it. In most cases, though, these costs are worth it.
- Varying results: Not all companies see the same results from free returns. It’s important to test any major changes you make here, or survey your customers, before making a big change.
- Costs: Free returns can lead to a hit in short-term profits, especially if you’re making the switch over from a less liberal policy.
For more on free returns policies and whether they’re right for your business, or to learn about any of our reverse logistics management solutions, speak to the pros at ReverseLogix today.