Although it’s been four years since L.L.Bean dissolved its industry-leading lifetime return policy, it harkens back to a period during which retailers offered competitively open return policies that only got friendlier with time. Consumers began returning items where and when they wanted, without pesky requirements such as receipts or restrictive time limits. Indeed, from the likes of Amazon allowing us to bring our returns to Kohl’s and Costco absolving its members of proof of purchase, relying instead on membership traceability, consumers grew accustomed to having unlimited ‘return freedom’. However, retailers are now being forced to do some soul searching. Through the prism of total handling costs of returns to the environmental impact, unconstrained return policies are now unviable long term. So, what should retailers and brands do? Can they put the genie back in the bottle? That’s a tough sell.
Instead, retailers need to be savvier with their policies. A good start would be to assess the true cost of returns on the supply chain. We all know that you can’t manage what you can’t measure — so measure! That measurement should extend all the way from handling cost and impact on your carbon footprint to the true repercussions on your customer satisfaction. Consider some of those secondary unintended consequences as well; competitive slip, strain on infrastructure, or logistics challenges like inventory mismatching where skis could be returned to a local store in Florida without slotting for that SKU. Before adjusting return policies, have a sharp picture of what that impact will be from a cost of operations standpoint.
Once there is a clearer sense of the cost side of the equation, attention usually turns to the impact on customer loyalty. Certainly, every retailer knows that we must remain hypersensitive to how policy adjustments will impact the lifetime relationship with their customer; forging these strong and lasting loyalties hinges on greater transparency and more sophistication toward customer segments. Sometimes, we may blindly assume that all customers and their behaviors will be the same, regardless of if they are buying a David Yurman bracelet or a roll of Bounty paper towels. But, let’s give them more credit when it comes to other aspects of the retail journey; while they will not accept going back to draconian return policies, how they respond to differentiated approaches is unlikely one-size-fits-all. Give your customers credit — they can be flexible. But communication is key.
Be open with customers in terms of the true costs of returns and the impact returns can have on everything from sustainability to overall landed costs. Communicate with customers before, during and after their buying process so they appreciate how those returns are part of the overall buyer journey. In an ideal world, customers would never want to return a purchase. But, we can’t unring that bell. If it is due to the wrong size, a damaged item, bracketing a purchase or simply not wanting the item once it is physically in our hands, returns will happen. Let’s do a better job communicating with our customers, so they are better educated on the impacts of returns and are more understanding when it comes to retailers’ policies as well as the impacts of their behaviors.
Lean on existing infrastructure to provide another avenue to channel returns. Brick and mortar — remember that? As Mark Twain once said, “The rumors of my death are exaggerated.” Not only are physical stores still alive and kicking, but there is a great opportunity to enhance the usage of these stalwarts from retail’s past. This is not necessarily a new practice, but it is likely to see an ongoing resurgence as an alternative to limitless e-commerce returns. Retailers should start thinking about tiering their returns as well; those that come back via the mail channel will be at a cost, but if you are willing to come in and return to a store, it is a free return.
Encouraging customers to bring items back in person also affords retailers a new touchpoint; make sure you take advantage of it. Explore cross-brand relationships like the aforementioned relationship between Amazon and Kohl’s. Are there complementary retail outfits that are within your demographic where customers can drop off a return? For example, if your customer is also a regular visitor to Tim Hortons or Dunkin’ Donuts, a partnership with that franchise for a returns drop box in their store could be mutually beneficial. Granted, this might create some logistics issues with regard to what types of items can be returned, where to hold them before they can be recovered and how to train the labor with this new task.
Returns are not going away. That much is clear. How we handle returns remains open to new and creative thinking. It’s a tall order, but reducing costs, easing supply chain complexity, being more environmentally conscious, while still being customer-focused, is achievable. And it may not be possible to please everyone; but some consumers will never accept to pay for returns, they might not be the best long-term customers we seek. As savvy and customer-focused retailers start rethinking how to better handle returns, savvy and conscious consumers will adapt how they process returns. This can only work if both sides do their part. Let’s welcome the group effort with a big embrace.