How Retailers Are Rethinking a Major Pain Point: Returns

January is traditionally a big month for returns as consumers emerge from their post-holiday slumber and begin tackling errands once more. With a well-documented rise in online shopping throughout 2020, you’d be correct in assuming returns have also seen an uptick. According to return platform GoTRG, ecommerce returns were up 76% this holiday season compared to the year prior. That’s in part because shipping delays prompted some consumers to make additional purchases to ensure their loved ones had presents to open, which Thomas O'Connor, senior director and analyst at research firm Gartner, noted naturally yields more returns. But as seamless as retailers can make the shopping experience, returns remain an unavoidable pain point. Even though big retailers typically make it easy to print a shipping label and allow drop-off at multiple locations, the process still requires customers to jump through a few hoops. This, combined with the cost incurred with free return shipping, explains why more retailers are starting to rethink returns—and particularly options beyond the mail. BORIS—and BORAC In-person returns—sometimes known as BORIS, or buy online return in store—are now the preferred option among shoppers: Per market research company Morning Consult, 74% of consumers planning to return a gift this season said they’d likely do so by bringing it to a store. Retailers also stand to benefit from in-store returns. “If you can get people into a store, you can try to turn that into an exchange or you can basically salvage the sale,” said Sucharita Kodali, vice president and principal analyst at research firm Forrester. Why Digital Storefronts—Not Physical—Matter Most Now Nevertheless, some retailers are offering on-site options that nix the trip in the store. Savings site RetailMeNot noted retailers like Dick’s Sporting Goods, Best Buy and Nordstrom are now offering curbside returns, saving shoppers the trip inside. This method, Kodali said, is about as frictionless as it gets for consumers, but she’s skeptical it will extend to many additional retailers—or endure beyond the pandemic. “I can't see other merchants necessarily embracing that," she added. "It's an extra cost to accept a curbside return without driving people into the store." O'Connor went as far as saying he expects some retailers to suspend curbside pickup after the pandemic for similar reasons while same- and next-day in-store pickup will become a cost-effective fulfillment option for retailers that don’t have the resources of an Amazon for fast delivery. Box-free drop-off Another emerging option is locations like those operated by return management platform Happy Returns, which has 2,600 so-called "return bars" at places like malls, stores and FedEx Office locations. “The [equivalent] of that is what Amazon and Kohl's have done, where you can return your Amazon purchases to a Kohl's location, Happy Returns is offering that to other brands," said O’Connor. Indeed, Happy Returns works with 170 merchants, including DTC brands like Everlane and Rothy’s. When customers want to return an item, they receive a QR code, which they take to a return bar, including stores like Paper Source and Cost Plus World Market, even if their purchase is from another vendor. For Rothy’s Next Act, the DTC Shoe Brand Is Expanding Into Bags Once they arrive with the item, Happy Returns helps initiate a refund, which CEO David Sobie said is faster than the traditional process. Plus, Happy Returns is able to aggregate returns to trigger discounted shipping rates for retailers. The method is resonating with consumers: As of December 2020, Sobie said returns via Happy Returns were up 40% year over year. “Amazon does the same thing—it's just they're operating in such a big scale … where we have to aggregate across all the merchants to get cost savings,” Sobie said. “Amazon just has the scale to do that on their own.” O’Connor noted that customer experience platform Narvar and mall operator Simon teamed up in November to offer similar functionality for brands like Gap and Levi’s—and he’s seeing more partnerships along these lines as retailers seek alternatives to footing the bill for free return shipping. It appeals to customer preferences, too. Narvar research shows one-third of consumers used an alternative location like this to drop off their last return—with 30% to 40% citing convenience of location or hours as the primary reason. In addition, 27% said they used a mobile QR code instead of a printed label for their last return. Just keep it Increasingly, retailers are issuing refunds and telling customers to simply keep the product in question. A 2019 Narvar study found roughly 10% of customers received refunds without returning an item—and O'Connor said the practice “increased quite significantly during 2020.” This, he said, is “a sign [retailers] have a reasonable grip on what it costs them to fulfill an order as well as to receive an order back if they offer free return shipping.” In the case of low-cost and/or personal care items that would not be resold, it’s simply not worth it. “Part of the challenge for retailers on this front is, yes, that's part of the cost of doing business where they are not only paying for the item to be shipped out to the consumer, but they are potentially also losing the inventory,” O’Connor said. “And so this is a whole other equation—and why you often see things like minimum purchase thresholds for free shipping or free returns.” Beautycounter’s New Store Is All About One of Retail’s Biggest Trends for 2021

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How Retailers Are Rethinking the Pain Point That Is Returns

Despite the pandemic, in-store options are in vogue

Lisa Lacy

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