Why Online Retailers Not Offering FREE RETURN SHIPPING Will Lose Thousands In Sales & Future Business: Harris

Why is offering FREE RETURN SHIPPING vital to every online retailer? Because not having a FREE RETURN SHIPPING policy has been shown to lead to huge lost additional sales and future business. In a ShopRunner/Harris Interactive study of over 2,800 online consumers, 81 percent of survey respondents stated that they are less likely to make additional purchases on Web sites that charge for return shipping. And a Washington-and-Lee University-based study that tracked consumer spending over four years found that consumers who paid for return shipping at a given retailer DECREASED their purchases by 75 to 100 percent within a two-year period.

81% of survey respondents stated that they are less likely to make additional purchases on Web sites that charge for return shipping 

While many online retailers offer FREE SHIPPING, much fewer offer FREE RETURN SHIPPING. According to a recent SmartHub study, over 90 percent of online retailers charge for return shipping; over 30 percent do not provide detailed information on their return shipping policies and charges on their Web site; and only 25 percent include a return shipping label in their package.

Consumers who PAID for return shipping at a given retailer DECREASED their purchases 75 to 100%  within a two-year period

Two Web-based retailers that offer free return shipping are Zappos and Urban Outfitters. Both of these merchants have easy-to-follow and liberal return shipping conditions. To qualify for return shipping at Zappos, orders must be shipped to, and returns shipped from, the United States. Urban Outfitters makes free return shipping even simpler. It includes a return and exchange pre-addressed shipping label with most shipments. The return package can then be dropped in a mailbox, given to a postal carrier, scheduled for a free carrier pickup, or given to an authorized USPS facility.

Why do so few online retailers offer FREE RETURN SHIPPING?

• Too many retailers overly fear that returns will increase due to free-return shipping. These retailers overly focus on the cost of free-shipping, repackaging fees, and price reductions associated with returned merchandise not being saleable as new.

• Still other retailers are concerned that free shipping will increase the number of consumers that will abuse their regular returns policies. Some consumers, for example, may take advantage of a liberal return policy to buy a laptop computer for use on a business trip or a vacation and then return it. The free returns policy would increase returns abuse.

How can an online retailer secure some of the benefits of FREE RETURN SHIPPING without incurring some of the risks associated with misuse?

• An online retailer should include a clear policy relating to free return shipping on its Web site. The policy should include a time limit for the free return policy to be implemented.

• An online retailer could also limit the free return policy to shipments that arrive late to consumers, to goods that are not as advertised (wrong size, color), or to defective goods.

• An online retailer also needs to make its return policy as easy as possible for the customer to implement. 69 percent of the respondents to the Harris Interactive study described return shipping as a complicated process. The online retailer's return policy needs to reflect the difficulty in a customer's receiving a return authorization number, a proper shipping label, and how the package needs to be returned.

With so much to lose in sales and business, should your firm revisit its return shipping policy? If so, what changes should it plan to implement?  Barry

Editor's Note:  Be sure to check out Retail Management, A Strategic Approach, by Barry Berman and Joel Evans.  

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Barry Berman

About Author

Barry Berman, Ph.D is the Walter H. ‘Bud’ Miller Distinguished Professor of Business at Hofstra University’s Zarb School of Business. Barry's authored or co-authored books on Retail Management: A Strategic Approach; Competing in Tough Times; Marketing in the 21st Century; and Marketing Channels. Barry has published in the Journal of Marketing Education, the International Journal of Retail and Distribution Management, and Industrial Marketing Management, on subjects that include customer loyalty programs, product proliferation, customer delight, mass customization, yield management pricing, and data mining. Barry is President of the American Collegiate Retailing Association. Follow Barry on Twitter and www.BermanEvansRetail.com>
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