Let’s be honest. When it comes to online shopping, nobody likes returns.
From a brand perspective, returns are costly, inconvenient, and on the rise as shoppers become more accustomed to online shopping. Considering over $203 billion worth of merchandise was returned in 2022 alone, “reducing returns” is a tall task.
Returns are also a major headache for shoppers, who often find themselves jumping through hoops to send products back to brands and (eventually) receive a refund. It’s become so cumbersome that 66% of shoppers say returns are the worst part of online shopping.
But while returns can be costly and inconvenient for all involved parties, how brands approach the returns process can be the linchpin in a customer-centric experience that drives incremental revenue and repeat purchases.
But don’t just take our word for it. We sat down with our friends at Loop to discuss why returns are an opportunity for brands to delight shoppers and differentiate themselves in the increasingly competitive ecommerce environment.
Hot take: Return rate is the wrong metric to track. Buy 0 rate and partial refunds tell a clearer story
Over the past 20 years, ecommerce brands have viewed returns as equal to refunds. If a shopper makes a return, the brand doesn't make a sale and often loses money due to shipping costs. While ecommerce has evolved significantly in recent years, our view on return metrics has largely stayed the same.
But what if we told you not all returns are created equal?
When looking at shopping patterns for returns, we could bucket them into these two types:
- Bringing the store to their doors (Partial refund): Shoppers are increasingly treating ecommerce similarly to brick and mortar, where you go into a store, check out the products, and pay for what you want. As a result, there’s a growing cohort of shoppers who put money on their cards, pay upfront, keep what they like, and return the rest. While this cohort contributes to increased return rates, they tend to be very high LTV shoppers.
- Shoppers that return everything (Buy 0s): This cohort of shoppers drags down unit economics because the brand didn’t make a sale and paid for shipping and return costs. This is the cohort that you want to analyze, so you can understand the reasons for the return and act accordingly. Ask yourself: Why did they purchase the product in the first place? Why were they unsatisfied? Did they not order enough products to find something to love?
As return rates continue to rise across the industry, data-driven brands are splitting out Buy 0s from partial refunds, knowing that the latter drives lifetime value while the former negatively impacts margins. Fortunately, the potential of leaning into exchanges far outweighs the negative impact of Buy 0s (more on that below).
The secret to customer retention and LTV? Embracing the post-purchase process
With the exception of making changes to their products, there's only so much brands can do to stop shoppers from returning products. So, as a brand, you have the option to either:
- Lean away from returns by making the experience difficult – negatively impacting the customer experience, and reducing LTV
- Lean in by making returns a seamless experience and working your unit economic model around returns, which makes your brand more competitive, creates a better CX, and improves LTV
While streamlining the post-purchase process for shoppers might seem counterintuitive, hear us out.
We’ve hit a point in ecommerce where shoppers are more cautious than ever before. Over 67% of shoppers will study a brand’s return policy before even considering purchasing an item – and will simply abandon their carts if the process seems too convoluted.
Additionally, the more steps a shopper has to take to return an item, the more frustrated they become with the brand, product, and overall experience. The same rule applies to the amount of time a shopper has to wait to receive a refund or replacement.
This is why it’s so important for brands to expedite the returns process wherever possible. For example, Loop will typically ship out a replacement product to shoppers looking to exchange before the return even arrives.
“At Loop, our north star is optimizing that post-purchase experience and figuring out how we can really help brands with retention.”
- Jenny Ross, Partnerships Manager at Loop Returns
Based on Loop’s market research, a streamlined returns experience can lead to:
- 95% chance of a repeat purchase
- 30% higher customer retention rate
- 2.4x increase in customer loyalty
Bear in mind new shoppers often need time to acclimate to your products – leading to more returns early in their relationship. But as they get more acquainted with your products, the likelihood of them initiating a return steadily decreases.
Additionally, as shoppers send back products and leave feedback on why they made the return, your brand can address these shortcomings to further delight shoppers and reduce the likelihood of returns in the long run.
What makes an easy return?
Unlocking a customer-centric returns experience requires three core practices: self-service, optionality, and simplified logistics.
1. Self-service to give customers control over their own experience
Rather than forcing shoppers to play phone or email tag with your CS team, you can provide them with a self-service returns portal that streamlines the process from inquiry to conclusion.
Let’s use TryNow and Loop’s partner, Hammitt, as an example. As a leading luxury handbag label, Hammitt needed a way to streamline their returns process and encourage upselling at the point of return.
With Loop, Hammitt was able to offer a self-serve returns portal that empowered shoppers to exchange their purchases for anything in their online store. This not only saved their customer support team countless hours of time but also bolstered upsell value by over $37,000 annually.
Hammit also streamlines the customer experience with its Try Before You Buy program – courtesy of TryNow. This program empowers shoppers to try Hammitt’s products at home before purchasing them, removing the fiscal barrier to entry and delighting both new and returning shoppers.
2. Multiple return options to create opportunities for upselling
Providing a shopper with the option to refund or exchange their products is incredibly important. Not only do these choices enrich the customer experience, they also increase the possibility of upselling.
For example, Cynthia Rowley, a leading global lifestyle brand, uses TryNow to give shoppers the option to try before they buy – streamlining the checkout process and removing apprehension.
The addition of Loop empowers their shoppers to exchange items, obtain store credit, and receive refunds through a self-service portal. With their entire catalog of products available via Loop’s returns portal, Cynthia Rowley has seen a significant increase in upsell value since their partnership began.
3. Simplified logistics save shoppers time & reduce friction
One of the most friction-heavy steps in the returns process for shoppers is packaging and shipping a product back to the brand. Offering drop-off locations, in-store returns, or at-home pickups significantly streamlines this step for shoppers who frequently struggle with online returns.
Loop’s partner Bstore proved how impactful simplified logistics can be when it received a 95 NPS rating from its shoppers only months after offering the service.
“Loop is taking arguably the worst part about shopping online, which is returns and making it as simple as possible. That's a huge draw and something that we've been able to differentiate ourselves on.”
- Jenny Ross, Partnerships Manager at Loop Returns
While self-service, optionality, and streamlined logistics are excellent during the post-purchase process, there is still some work to be done to convince shoppers to complete their initial purchases. This is where TryNow comes into play.
Closing the Loop (no pun intended) with TryNow
The partnership between TryNow and Loop has flipped the traditional ecommerce shopper experience on its head — to the benefit of brands and shoppers alike.
With Loop, shoppers have a curated returns experience at their fingertips — empowering them to complete the post-purchase experience at their own pace and preference.
TryNow takes it one step further by removing the risk of online shopping with Try Before You Buy. When no money changes hands, refunds become nonexistent, and returns are seamless. Gone are the days of shoppers asking, “Where’s my refund?!”
This culminates in a truly customer-centric experience that cultivates shopper loyalty, boosts conversions, and drives incremental revenue.
As the eCommerce landscape continues to evolve to meet shopper needs, brands that view returns as a hindrance will struggle to keep pace. Conversely, brands that embrace and streamline the post-purchase process will carve out a solid competitive advantage.
“Loop prides itself in de-stressing the returns process for brands and shoppers alike. Partnering with TryNow bolsters that stress-free experience, helping brands drive revenue and deliver world-class shopping experiences.”
- John-David Klausner, SVP of Partnerships at Loop Returns
Sign up with TryNow and join our growing list of customer-centric brands today! — sign up for your 45-day free trial.