How to make returns your competitive edge

Table of Contents
1: The State of returns in 2017
2: How merchants win with returns: case Studies
3: Practical guide: 11 tips to make your returns magical

1: The State of Returns in 2017.
We surveyed over 1,000 shoppers in US, UK and AUS and asked them about their expectations with
returns. Here are the takeaways.

The State of returns in 2017
Returns build
trust and
loyalty.
Returns
affect
conversion.
Returns are
the new
normal.
Shoppers now expect a simple
return experience. Amazon and
other large e-commerce players
are setting consumer
expectations for convenience of
returns.
83% of consumers read the
return policy before buying.
Most shoppers say that a
restocking or return shipping fee
can prevent them from buying.
77% of returns are done by repeat
shoppers and 72% of consumers
will spend more with merchants
that make returns simple.
Source: Return Magic 2017 Consumer Survey. Canada Post’s How to Transform Returns into Assets, Metapack’s Returns - the new battleground.
2 31

1: The new normal:
Returns are central to the buying journey
of consumers have returned an online
purchase in the last three years.
The return touchpoint is now mainstream and
affects most of your customers.
89% 41%
of customers buy the same items in
multiple sizes or variations, with the
intent to return some of them.
Customers now try on the items at home and
decide after which items they keep. The return
touchpoint is not an aftermath of a transaction
gone wrong; returns are now a central part of the
buying decision.

1: The new normal:
Shoppers avoid hassle
Of shoppers mentioned that adding return friction
with extra email or phone communication results in a
negative return experience. One irritant that came up
often is the lack of clarity to track a return status. Many
shoppers are worried about their returns getting lost.
58%

1: The new normal:
The Amazon effect on returns
Amazon is setting the level of expectations for
shoppers across the industry.
Amazon counts 300m users, while adult US population is 301.2m. Given how prevalent
Amazon is, they have come to define the consumer expectations around what a good return experience
should look like. Amazon shoppers especially enjoy the transparency, where they can track their return
status themselves. For context, one out of three of shoppers worry about having their return package lost
when shopping online. Being able to choose from multiple refund methods, such as cash or store credit, was
also mentioned as a plus for convenience.

1: The new normal:
Shoppers expect free returns
Of consumers expect free
returns.
80% 25%
Of merchants offer free
returns.

2: Returns increase conversion
of consumers read the return policy
before buying. The return touchpoint has
an impact on conversions. In fact many
merchants use a “Free Returns” campaign
tactically to increase conversions when
sales are being target.
83% 71%
of customers find that a restocking fee or
shipping fee can prevent them from
making a purchase. A restrictive policy
will prevent customers from buying.

2: Returns increase conversions:
Shoppers want a longer return window
of customers believe that the return window should
be at least 30 days. On average it takes 2.5 to 3.5
weeks for a customer to return an item from the
time of purchase.
57%

3: Returns build trust and loyalty
Tony Hsieh, CEO at Zappos about returns and loyalty:
“We also offer a 365-day returns policy for people who have
trouble making up their minds. (Originally our returns policy
was only 30 days, but we kept increasing it at the urging of
our customers, who became more loyal as we lengthened
the returns period.) Our returns run high—more than a third
of our gross revenue—but we’ve learned that customers will
buy more and be happier in the long run if we can remove
most of the risk from shopping at Zappos.”

3: Returns build trust and loyalty.
of consumers said they would spend
more and buy more often with
merchants that make the return
experience simple.
72% 77%
of returns are done by repeat shoppers.
Or to say differently, people who return a
lot also tend to spend a lot, and they trust
the brand. It means that they are actively
engaged with the brand.

3: Returns build trust and loyalty
of repeat customers who had a good return
experience are likely to buy again. The return
experience is a good predictor for customer loyalty
and overall customer NPS.
89%

2: How merchants win with returns
We asked 3 successful medium-sized fashion retailers to share their tips & secrets win with returns

Midori Bikinis
What is your main goal with Black
Friday?
“Our biggest goal for Black Friday is to push out products
that won't be restocked. This is our last big push before we
go into production mode for the next summer season. If we
can push out more than 70% of old inventory it has been a
successful Black Friday.”
What is your main challenge with
returns during Black Friday?
“The most challenging part of returns is budgeting for the
incoming pieces both with revenue and with inventory. We
manage this by halting restocks at a certain point then
moving all return pieces to a trunk show or online sale later
on in the year.”
How do you handle discounted items
as part of your return policy?
“We have tried final sale as well as store credit only returns
for discounted items. We most likely will use store credit
only for the Black Friday sale this year”.
[That being said] “Final Sale items is one of the best ways to
handle a sale of this magnitude, especially if you are
focused on getting rid of inventory. Be as clear about the
final sale as possible but still be prepared for customers
being upset if you haven't done final sale in the past. Have a
game plan for how to deal with disgruntled customers and
remain consistent.”
What helps you be successful during
Black Friday?
“Preparation is key for Black Friday We usually do a special
returns policy for black Friday sales. The most important
preparation is updating the automation rules in Return
Magic and updating the website to display the new return
policy in as many places as possible..”

BAGGU
Friday?
“We want our customers to trust us and our product.
Creating a free and easy return process is a part of the
customer journey we think about often, especially going
into the holiday season.”
“Getting valuable feedback from our return data. Return
Magic is beginning to help us with this, and we see a lot of
potential wins there in the future.”
“Sale items are not accepted as returns. However, general
discounts (15% off your purchase) are treated as normal
purchases and may be returned.”
Black Friday?
“Planning as far in advance as possible really helps our
team feel prepared going into the holiday season. We
focus on creating an enticing offer paired with exciting
visual content and easy customer experience.”

iHeartRaves
Friday?
Sales, sales, sales. However, in terms of execution the
stakes are much higher and the margin for error is
minimal to pull off a large % increase of orders in an
extremely short period of time. This puts an extreme
amount of pressure on the entire team to perform, but we
love the challenge!
It was hard to manage the entire returns process but
Returns Magic has made it very streamlined today.
We don’t do final sale promotions as we always want to
ensure our customers are 100% happy with their
purchases and always have the option of returning if
needed.
Black Friday?
Year round we train our customers to always purchase w/
hassle free returns and we believe this pays off during the
holidays. Lots of people are impulse buying because of the
huge deals during Black Friday and it’s extremely
comforting to know that we have a super slick return
process if the customer decides to not keep the purchase.

3: Making returns magical
Time to get practical. Here are 11 tips to help you win during the holiday season.

Preparing for the holiday season
Design your optimal return
experience.
Take a holistic view.
It’s important for a retailer to first develop an opinion on what is the
right return experience for their shoppers. Should you offer a free
label or not? What is an appropriate time window to return the item?
Is it better to include a return label in the box or not?
We suggest to spend an hour or two doing a bit of research on return
experience, taking your customers’ point of view, in order to
understand what is the right return experience for your store. For
example, you can buy and return items online on the site of large
retailers such as Nike, Zara, etc. to understand what makes their
return experience interesting. You can also buy and return items
from your site and your peers or competitors. What did you notice?
How does your current experience compare? Sounds simple to do,
but testing your own approach to returns and framing it in reality is a
great starting point.
1
Make your return policy as
clean and simple as
possible.
Most return policies look like contracts with fine prints and complex
terms. The harder it is for a shopper to understand your policy, the
harder it is for them to trust your brand, and to trust that you care
about them.
Now, how does a simple return policy help to build brand trust? Given
that over 80% people will look at your policy, it is absolutely worth
optimizing the wording for conversion.
Fundamentally, a clean, short and simple policy that can be
understood in less that one minute inspires more trust from
shoppers. It reduces chances of misunderstanding and confusion.
Take a look at Midori Bikini’s as an example.
2

Preparing for the busy season
“Year round we train our customers to always purchase
with hassle free returns and we believe this pays off
during the holidays. Lots of people are impulse buying
because of the huge deals during Black Friday and it’s
extremely comforting [for them] to know that we have a
super slick return process if the customer decides to not
keep the purchase.”
Brian Lim
CEO / Founder
Emazing Group
EmazingLights | iHeartRaves | IntoTheAM

Final sale & discounted
items: use product tags.
Given that Black Friday Cyber Monday is relatively
promotion-driven, it is important for retailers to have a
specific strategy for specific discounted items. Some retailers
will make them non-returnable, or store credit-only, others
will increase the restocking fee for these discounted items.
By using a product tags, you can create a smart way to
manage returns specific items to protect profit. This is
something Return Magic can help you with.
3
Invest in automation to
handle large volumes.
Just like ecommerce revenue, returns tend to be seasonal.
Dealing with a very fast growth in sales is overall a great thing
for a retailer, however the dark side of this growth comes
when there are too many returns to handle effectively,
leaving the customer with a poor experience.
In order to keep on top of increasing returns, retailers should
streamline the process by automating labels, tracking &
refunds. By saving time on repetitive tasks, customer service
is free to focus their time on value-add tasks, like building a
positive relationship with the customer.
4

“We have tried final sale as well as store credit only
returns for discounted items. We most likely will use store
credit only for the Black Friday sale this year”.
[That being said] “Final Sale items is one of the best ways
to handle a sale of this magnitude, especially if you are
focused on getting rid of inventory. Be as clear about the
final sale as possible but still be prepared for customers
being upset if you haven't done final sale in the past.
Have a game plan for how to deal with disgruntled
customers and remain consistent.”
James Fisher
CFO
Midori Bikinis
Midori Bikinis

Promote convenience
across your site. Make it
visible.
As mentioned earlier, promoting free and easy returns across
your site can help increase conversion and build brand trust.
That is even more the case for fashion & luxury product
categories.
If you are not able or willing to offer free returns, promoting
easy returns can still be a viable strategy. Just by knowing
that there will not be any hassle for returns and that an item
can be tracked, you can still encourage the majority of
shoppers to buy.
5

Offer many ways to refund
your shoppers.
Shoppers like choice. They already can choose from multiple
refund methods on many other websites. Why limit them to
one option i.e. original payment?
By offering many refund options,, you can enhance the
experience. Shoppers love the convenience from having more
control. This can help build trust in the brand.
6
Leverage gift cards.
Related #6, when customers choose gift cards as a refund
option, you get to keep the money in your store. So you can
encourage gift card refunds to improve your cash flow
position.
For example some merchants will deduct a fee for cash
refunds, while they will offer gift card refunds for free. This
gives an incentive for the shopper to opt for gift cards, while
staying in control (they can still pick cash refund).
7

Managing during the busy season
Be transparent.
Send email updates.
Make tracking simple.
Making the return process transparent can deliver many
benefits. Confusion erodes brand trust. Uncertainty increases
customer contact. By giving them the means to track their
order themselves, and sending them email or SMS updates,
you help your customers relax. You make them feel more
important too.
8

Stay on top. Review &
manage returns on a daily
basis.
Preserve trust. After Black Friday, you’re likely to receive a
wave of returns. It’s better to ride the bull by the horns and be
proactive about processing these returns.
It means carving extra time to stay on top of new requests
that are coming in. Things can evolve very quickly, so it’s a
good idea to check in daily and make sure nothing is on fire.
As for customer contact, customers that are trying to return
tend to be easily irritated if they do not receive a response
within a day. You have their their money, trust is at stake.
9
Ask your shoppers about
their return experience.
Getting customer feedback can be tremendous for improving
the return experience. You can survey NPS specific for
returns. This will give you insights on the friction and how you
can act.
For example you could find out that you have specific
inventory sizing issues in a specific category. Or you could
learn that you have specific quality issues with a
manufacturer. These lessons gives you insights on how to to
improve your operations.
10

Analyse the data, write
down learnings &
improvements for next
year.A post-mortem can go a long way to get your team’s
learnings from this year’s BFCM. There may be a lot of
different things to improve if your store is fairly young.
It’s better to pick fewer things, to improve (maximum 3) and
focus only on them until they are embedded. By taking notes,
it will be helpful next year to remember what went well or
not, and will be invaluable knowledge to new team members
that are on their first Black Friday / Cyber Monday.
11

Select Merchants Making Returns Magical

Return Magic is an API solution for online
merchants.
Software as a service to optimize the return
touchpoint for revenue and profit.
With over 2,000 installed merchants, Return Magic
works with leading fashion brands.
Get in touch

How to make returns your competitive edge

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