Despite countless improvements to the e-commerce model that have made customer experiences faster, cheaper, and easier, the return process remained a headache for customers until quite recently. The ease of online shopping, complemented by Amazon’s ripple effect and our starkly high standards for service, has resulted in the practice of noncommittal retail purchases. The relationship between e-commerce and returns has devolved into a kind of rental (though different from veritable retail rental services) in which customers front the money for products and complete the transaction, all with the intention of returning anything they don’t love. In eras past this would be unthinkable; product costs, risks, and the logistics of completing returns according the company’s return policy would’ve made this a fraught endeavor.
To stay afloat during the pandemic, retailers made return policies more lax, which created new gaps for customers to take advantage of. Beyond retail it is not unusual to purchase multiple variations of an item to examine at home and then return the rest. Innovations in customer experience management have sought to replace the need to physically experience products with high-tech tools, but they have not been implemented widely enough to dissuade customers from their affinity for returns.
Customers are making returns than ever before. While this may paint a picture of low-commitment shopping that ultimately results in real sales, retailers still lose a significant amount of money each year to returns. Easier and more inexpensive returns processes should lead to a reduced need for downstream customer service, benefiting customers and contact center leaders. When considering the ways to make shopping experiences more pleasant, streamlined, and cost-conscious, we’ve graded the following tactics on their customer centricity, cost effectiveness, and environmental impact.
Refund without Return
It sounds too good to be true–you get to keep the product and your money? More and more companies are recognizing that some products are worth so little (or are unsalable) that it’s cheaper to let the customer keep it than return it. Obviously these companies aren’t promoting which products may end up being free, but most customers would be delighted to find that their refund will be as quick and easy as a digital customer service touchpoint. Unfortunately, leaving an unwanted product with a customer almost guarantees it will be sent to the landfill, creating a great deal of unnecessary and avoidable waste.
Customer Centricity: A+
Cost Effectiveness: B-
Environmental Impact: D
Return Fees
One of the more standard approaches to returns, most companies used to issue a flat fee to return a product. Before big box stores set the standard of free returns within 30 or 60 days, fees were widely accepted as reasonable. Nowadays pretty much all experiences are compared to these big box stores and Amazon, though, so the fee may be perceived as a disappointment in comparison. Ideally this fee structure would be set up to recuperate the cost of returns, dissuade customers from needless returns, and support supply chain practices that are eco-conscious.
Customer Centricity: B
Cost Effectiveness: B+
Environmental Impact: C+
No-Return Discount
Offering discounts to customers to opt out of returns at the point of purchase is an interesting and opportune tactic that, when leveraging the correct customer data, could be a win-win-win. CX leaders could use past order data to identify repeat customers who infrequently make returns and offer them a special discount if they agree that they cannot return their next order. Some of these customers will be converted into brand advocates, and the initiative is likely to reveal insights about which customer profiles are more likely to pass on such a discount and continue making returns.
Customer Centricity: A
Cost Effectiveness: B
Environmental Impact: B
Virtual Product Experience Tools
New tools that use virtual reality augmentation allow customers to visualize how products, particularly clothes and furniture, may fit into their life. As this technology becomes more customizable and accurate it could satisfy shoppers’ desire to assess products before committing to the purchase. AI augmentation will likely increase the accessibility of such features, but as we’ve seen so far with other generative AI products, the environmental cost can be steep.
Customer Centricity: B
Cost Effectiveness: A
Environmental Impact: C
Happy Returns
The company Happy Returns disrupted the return model in a big way, solidifying itself into the market as a part of UPS in 2023. Offering drop off locations for hundreds of partner organizations and detailed support resources, Happy Returns has made the return process significantly more convenient for customers while introducing end-to-end security to reduce return fraud. Its meteoric rise serves as evidence of how customer experience pain points that exist across industries are best solved by horizontal solution providers.
Customer Centricity: A
Cost Effectiveness: A
Environmental Impact: A
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