Making a sale is exhilarating as an e-commerce store owner. So why in the world would you want to allow your customers to return items, especially if nothing is wrong with them? The simple answer: a friendly returns policy can actually increase sales.
This isn’t just our opinion, either. A study from the University of Texas at Arlington came to the same conclusion: Lenient return policies can increase sales. And even though it may seem counterproductive to encourage returns by making it easy, the extra sales you will earn can easily offset a higher return rate.
Here are five ways a friendly returns policy can help you grow your e-commerce business:
1. Make Customers Feel Confident in Buying
Customers hesitate to finish the checkout process for a number of reasons. What if it doesn’t fit? What if they don’t like the color? What if the item just doesn’t do what they hoped it would do?
One way to tip the scales in favor of a sale is to take away the risk. Let them know that if an item doesn’t meet their expectations, they won’t be on the hook for it thanks to your hassle-free return policy.
This one simple thing can make customers feel better about buying from you. It reduces risk on their end, plus it gives you a chance to wow them with a great experience so they will keep buying from you.
2. Add Value Beyond Price
Buying decisions aren’t based on price alone. Customers expect all-around value in their purchases, and price is only part of the equation.
Case in point: the free shipping vs paid shipping conundrum. Consumers hate paying for shipping. They’d rather pay a little more for an item from a retailer that offers free shipping than to get an item for less but pay for shipping. It’s because it is easier to understand the overall value in a free shipping option!
When it comes to your returns policy, leniency goes a long way in adding value to every sale. The aforementioned study found that lower perceived hassle resulted in lower perceived risk. And while leniency in time and effort didn’t increase purchases as much as monetary leniency, these areas resulted in fewer returns.
There are lots of ways you can add value to your returns process, too. For example, you might offer to pay for return shipping or include a pre-paid shipping label with every order.
Tools like Zenventory make it easy to manage your returns process, create RMAs, and track the progress of each return with ease.
3. Keep Pace with Amazon and Other Large Companies
E-commerce store owners aren’t just competing with local merchants and other small e-comm businesses. They’re also contending with massive marketplaces like Amazon, Walmart, and Target. One of the most consistent and attractive things about buying from these large companies is their returns flexibility.
Larger companies have set a high (and costly) bar when it comes to customer service. So much so that customers now expect things like easy returns and free shipping to be par for the course. What choice do you have?
Instead of trying to fight the current, it’s best to lean into it. Find ways to make a friendly returns policy work for you in a way that’s still profitable.
For example, you could have customers pay for some or all of the cost of returning an item. Or, for low-priced items, you might even have the customer keep it and issue the refund anyway. This allows you to save money by not paying restocking fees or return shipping, plus it makes a strong impression on the customer.
You might also choose to offer refunds in the form of gift cards or store credit. This way, customers will give you another chance to earn their business with a great experience. Or worst-case scenario, they will give their credit or gift card to a friend who will get to experience just how great you are!
4. Use Your Returns Policy as a Competitive Advantage
Returns policies come in all shapes and sizes. Some are more generous than others, such as Zappos.com and its free 365-day returns. Some are less forgiving, like Apple’s requirements for software to be unopened or for devices to have the original packaging, cords, and adapters. And some smaller stores don’t accept returns at all!
A good place to start for determining what works best for your specific industry is to look at what your strongest competitors are offering. You can use your returns policy to your advantage by making it better than the rest. Do a little research to see what their customers find to be the most frustrating about returning a purchase. Then, see if you can alleviate their pain points in your own returns policy.
5. Keep Existing Customers Happy
A poor returns experience can quickly push away even your most loyal customers. And that’s a costly problem because it costs way less to sell to existing customers than to acquire new ones.
Looking at returns from a cost-per-acquisition standpoint, a strict return policy could mean a once-happy customer will buy less from you. Not only do you lose their business, but also any referrals they may have given you. That could mean a significant loss in revenue and slower business growth.
It’s costing more and more to advertise your business online, studies show. To make matters worse, paid traffic rates are on the decline. You’re paying more money for fewer new customers, so now is the time to do all you can to hang onto your current customer base.
Simplify Your Returns Policy with Zenventory!
Ultimately, how you structure your returns policy is up to you. Yes, returns could mean products come back damaged, you lose money on some orders, and you face more operational complexity. But you can offset these challenges with increased sales and a reputation for being a friendly company to work with when things don’t go as planned with a purchase.
Zenventory helps streamline the logistics of a generous returns policy with done-for-you tools like RMAs, inventory restocking, tracking, and more. Handle damaged goods appropriately every time, get resellable items back on the shelves swiftly, and keep your customers happy. Learn more when you schedule a demo.