Return Policies from the Eye of the Store

October 14, 2017


It seems obvious that a return/exchange policy is necessary. You never know if something will stand up to your expectations; as a customer, knowing the return policy is a bit like an escape route. You hope that you won’t, but should you need it, you want to know where the exits are and how to access them. 

But, while serving the customer, ultimately, the biggest winner is the business: “return policies have [become] as much a marketing tool as a retail standard,” — NYTimes

How so?

Well, overall, a return policy is design to maximize profits. And, perhaps surprisingly, there are several ways to earn this result.


Decreasing the number of returns

Obviously, the ideal is that customers would buy only what they want, and be pleased with the product! Maximizing that is, of course, a priority; but, there is more to it.


- Minimizing incorrect fit issues

The rate of returns for online shopping is higher than "bricks-and-mortar" stores, and this is especially true for clothing & shoe categories. We will continue to see more and more "fit guides" and special apps to determine correct fit; it's worth it for retailers to develop tools that will help us shoppers get it right the first time.


- Limiting the scope of possible returns

Sometimes, a retailer will have limitations on what can be returned (like, no returns for items on sale) or online, items that might require a "restocking fee". These limits may deter someone who is on the fence from returning.


- A longer timeline actually decreases returns

While an increased scope (i.e. what you can return) increases returns, the opposite is true for timeline: the longer the window to return, the less likely a customer is to return it! A University of Texas-Dallas study found that if a return window is longer (more like 90 days, instead of say, 5 days), the rate of returns goes down. Customers get used to having the thing around, they forget about it, or at a point just can't be bothered.

 



Increasing sales

The right return policy can not only deter returns, but actually increase sales: a psychological trick that we don't anticipate at all!


- A lenient, no hassle return policy encourages fast & easy spending

If you think, I can always return this, it waaay lowers the barrier to buying it. Why not just go for it now becomes the mantra of store & customer alike.  But is there truly such a thing as a hassle-less return? Do we really account for our time, energy, gas, and other activities we could be doing? Do we account for our own affinities & motivations?

One friend I have is delighted to run errands and has no problem with purchasing goods only to return them later. But me? No thanks. Dragging me back to a store to return an item takes A LOT, and if it is a lower price, I often put it off until it is too late or I just don't care anymore.

Online retailers are working hard to find truly low-hassle solutions for returns, to create the best of both worlds. Some clothing stores or big operators will include return labels and even account for returns when designing their packaging, so that it can be re-used on the way back.


- The design of the store

Separating the returns counter from the checkout means that bright-eyed customers with their wallets open do not have to rub shoulders with disgruntled people returning the very thing they might plan on purchasing.

If the checkout process is swift & easy, the only memory you will likely have (regarding how it would be to return something) is that quick & efficient process. The reality — if you've ever been to the Best Buy exchange line, you know — is not quite the same!

 

Next week, we'll explore what it looks like from the customer side: how do we make choices to set ourselves up well in case a product purchase is a mistake, and how to advocate for ourselves if things go awry. See you then!


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