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Why It's Time for Retailers to Embrace Online Returns Make sure you see a good return policy as a critical step, not an afterthought.

By Chris Dunn Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

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Retailers are finally beginning to realize that a good return policy is a critical step, not an afterthought, in the online path to purchase.

Related: 4 Things Shoppers Want in an Online Retailer's Return Policy

High return rates have long been the Achilles' heel for the ecommerce industry, where one in three online purchases is returned. For online apparel purchases, the rate is closer to 40 percent. Why are these return rates so high? Because online shoppers do not have the sensory experience of seeing, touching and, most importantly, trying on an item before they buy. With ecommerce, it is easy to order the wrong size or find that the color or fabric is not what was expected.

As a result, the behavior and motivations of online shoppers are different. Rather than go into a store to try on a garment, they have those garments come to them. Online shoppers commonly buy multiple jeans, shoes, shirts, dresses, etc. They choose one, then send back the ones they don't want; they buy things with the intention of making a decision from the comfort of their own home.

While this behavior does lead to spiked return levels, it is a behavior that online retailers need to accept, even embrace. Online customers want the same customer service and return policies they would receive if they bought items in a brick-and-mortar store. Those retailers that do not adopt consumer-friendly return policies will find themselves left in the dust by those that do.

Returns policies: the facts

Etailers would be wise to consider their returns policies and those policies' potential impact on prospective shoppers. Because studies have found that a majority of online shoppers take the time to read the return policy before they make a purchase, it's easily as important a selling point as whatever factor captured the sale in the first place.

Clearly, a retailer's return policy plays a central role in shoppers' decision to buy. An etailer could have the most beautifully designed website, dynamic social media campaigns and seamless checkout experience, but without customer-friendly returns, those efforts are undermined. Returns are part of the shopping experience, and any frustration associated with this process will leave a lasting, negative impression on the consumer.

The facts help us better understand the consumer mindset in regard to returns. Recent surveys and studies have found that over 85 percent of consumers want a convenient returns policy, with about 55 percent seeking the most affordable return shipping option (when return shipping fees are assessed).

Related: 5 Secrets to Painless Returns

While etailers have long focused on the "buying experience," few have done the same with the "after-buying experience." Since products get returned online quite often (about one-third of all online orders are ultimately sent back), smart etailers need to understand how returns, and what shoppers want, play a pivotal role in merchandising. In a nutshell, the return policy and the process that surrounds it is the "after-buying experience."

Getting returns on returns

Bad return policies are the legacy of an earlier ecommerce age. Today's consumer demands flexibility, transparency and convenience. As online shopping evolves, retailers' return policies need to evolve along with it. Amazon and Zappos have thrived by adopting generous returns policies that customers trust. In fact, Zappos -- which offers free two-way shipping and a 365-day returns policy -- found that its customers with the highest return rate are also its best customers.

If generous returns policies, then, so clearly influence sales and loyalty, what is holding retailers back?

To start, returns can be a pain to deal with and merchants want their revenue to be safe. However, many retailers believe that by making the returns process difficult, customers won't make returns. This is a mistake. If a customer wants to return an item, he or she won't be deterred by those difficulties, just annoyed and less likely to shop with the etailer in the future.

Retailers are also deterred by the myth that returns are expensive. While they may present some upfront costs -- such as return shipping and restocking costs -- offering hassle-free, cost-free returns more than makes up for those problems in the long run. Moreover, the cost of returns has decreased, thanks to affordable, integrated technologies, now available to small and medium-sized online businesses, that had not been made available before.

Virtually every etailer has a web store, but these websites are focused on sales, not returns. Until just recently, well-accepted and successful return systems -- like those used by Amazon or Zappos -- were not generally available to SMBs due to cost or the lack of technology. But new solutions are making the case for simplified product returns -- an example being plug-ins to the etailer's web store to allow consumers to process their returns and create their own return shipping labels.

Tips on creating an effective return policy

In addition to technology, etailers should be mindful of the basics of any good online return policy. Several key elements play a strong role developing consumer loyalty.

  • Assure that making a return is as simple as making a purchase, by offering a convenient and automated online return system.
  • Communicate clearly to customers how the return policy works.
  • Avoid charging any return shipping fees or restocking fees, to encourage future sales.
  • Be flexible with the return policy so that shoppers have an adequate window of time to make returns.
  • Inform customers of the return policy in a conspicuous place on the website, so that it's easily accessible at all times.
  • Increase consumer confidence and decrease abandonment by reinforcing the return policy during the checkout process.

The end resolve is that etailers need to embrace the concept of a returns process, because it is a key part of the purchasing cycle. The failure to have a convenient process in place equates to the lack of a presence on mobile, or the failure to include social media. It is part of staying competitive and serving customers' needs in today's rapidly moving world of digital commerce.

Related: Why Stellar Customer Service Is Key to Building Your Online Brand

Chris Dunn

Head of Business Development, TrueShip

Chris Dunn is the head of business development at TrueShip, a shipping software provider for small-to-mid-size ecommerce retailers. TrueShip’s ReadyReturns solution offers hassle-free, automated returns for virtually any website. 

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