How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences: 3 Tips for 2021 - DATA REPORT
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How to Drive Customer
Loyalty and Revenue Through
Enhanced Returns Experiences:
3 Tips for 2021
D ATA R E P O R T
M AY 2 0 2 1
© 2021 Optoro, Inc. All rights reserved. Optoro is a registered trademark of Optoro, Inc.What consumers expected from retailers one year ago—or even 6 months ago—has
dramatically shifted. Whether a result of the “Amazon effect” or “post-pandemic digital
acceleration,” consumers are no longer satisfied with the status quo. They are looking
for retailers to provide an ever-growing level of choice and convenience; contactless
payments, fast and free shipping, BOPIS (buy online, pick up in store), and even
curbside pickups, are now table stakes.
= 3-5x
As eCommerce continues to accelerate,
returns increasingly become an inevitable part
of the customer journey. Why? Ecommerce has
a returns rate that’s 3-5x1 higher than brick- online returns vs
brick-and-mortar returns
and-mortar due to consumers purchasing
items sight unseen, or purposely buying two
different sizes with the intent to return the one
that doesn’t fit. To put that into perspective,
the National Retail Federation (NRF) estimates
that returns amounted to $428 billion in 2020; $428B = 16% in returns increase
a 16% increase in just two years.²
As sending back more purchases becomes
more of the norm for customers, so do their expectations of flexible, free returns
experiences. In fact, 89% of consumers who recently made a return reported checking
the retailer’s return policy before making that purchase.³ And 42% of consumers have
reported going through a returns experience so negative that they never shopped
with that retailer again.⁴ Retailers with returns policies that don’t match customer
expectations are at risk of losing business.
But what do customers expect in our new normal? Optoro recently surveyed over
3,200 US consumers to ask about their returns behaviors and preferences in the last
six months and how retailers’ returns policies and processes either drive loyalty or
drive them away. After analyzing the data, we identified 3 major tips for fostering
customer loyalty and growing revenue in 2021:
1 2 3
Prepare for Deliver the Ensure your
most shoppers to “Amazon Experience” returns processes
become returners customers now expect are sustainable
1 Optoro User Research & Analytics (2016-2019)
2 Customer Returns in the Retail Industry, NRF, 2021.
3 Retail Returns and the Customer Experience, Optoro, 2018.
4 The Impact of COVID-19 on Consumer Returns, Optoro, 2020.
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 21 Prepare for Most Shoppers to
Become Returners
Shoppers are returning more purchases than ever. 74% of surveyed consumers reported
making a return in the last six months.⁵ That represents over 7 out of 10 customers
eventually returning an item! And when looking at returns habits by age group, we found
that a whopping 82% of 30-44 year olds made a return in the last six months.
This number has been steadily increasing over the past year. In October 2020, 68% of
consumers reported making a return in recent months, while that number was 66% in
February of 2020.⁶
But that doesn’t mean retailers need to settle for lost revenue. By enhancing the returns
experience retailers can not only build repeat customers, but also grow revenue.
According to research from Returnly, a returns experience
that meets—or even exceeds—customers’ needs can Loyalists
create shoppers called “Loyalists.” Loyalists return account for
merchandise undamaged and on-time, enabling retailers
to quickly restock and remarket returned items. This group
39%
of retailer
of customers even ends up spending more, accounting for revenue
39% of a brand’s total revenue.⁷
So how can retailers create a customer base of Loyalists? We asked consumers what
they most want in a returns experience, and found that:
Consumers who think that a convenient
3rd party drop-off location is important
81%
Consumers who reported wanting an
online portal to initiate their returns
78%
Consumers who would like an instant credit
to repurchase a new item immediately
68%
Consumers who want to be given
14-60 days to return an item
63%
The majority of consumers (53%) want a refund
within 3 days, with 26% expecting it immediately⁸
26% 53%
5 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
6 The 2020 Holiday Returns Season: How COVID-19 is Changing Consumer Habits, Optoro, 2020.
7 2020 State of Returns Report, Returnly, 2020.
8 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 3Additionally, 90% of consumers reported that an easy and convenient returns
experience that offered all of the above would make them either likely, or very likely,
to exchange that item or repurchase another one immediately.⁹
2 Deliver the “Amazon Experience”
Customers Now Expect
Retailers have found themselves competing with Amazon for years. But as of late,
the race to keep pace with Amazon’s free shipping and returns, and ever-decreasing
delivery times has escalated. In 2019, a new expectation for convenience arose when
Amazon announced that shoppers could now return items to Kohl’s without packaging
them for shipment. This type of drop-off program has increased in popularity, and
several other similar partnerships have since been developed.
When we asked consumers which retailer had the best returns experience, 53% of
respondents mentioned Amazon.10 Many noted liking the ability to return an Amazon
order to Kohl’s by using a simple QR code on their phone, dropping off the unboxed
item, and being on their way.
C O N S U M E R T H O U G HT S O N A M A ZO N
“ Amazon is #1. They
can have you drop off
an item at Kohl’s, scan
“ Amazon because
they are easy and
convenient. No need
“ Amazon because you
just have to take the
item as is...my account
your phone, and you to print labels or is automatically
are done. package items most credited and I do not
of the time. have to wait until it
gets back to Amazon.
” ” ”
It all boils down to choice and convenience. Amazon lets customers choose what
is most convenient, whether that is returning an item via mail with a prepaid label,
dropping it off unboxed at a Kohl’s, or popping it into an Amazon locker at Whole Foods.
These preferences are a big change from not even three years ago. In a November
2019 survey, we found that 67% of consumers preferred returning items back to the
9 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
10 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 4retailer’s physical store. By October 2020, only 40% of 100
respondents reported returning items back to retailer’s
stores.11 And in this most recent survey, only 28% of 75
consumers had reported recently returning an item
back to a retailer's physical store.12 67%
50
In order to meet customers’ changing 40%
expectations, retailers should evaluate the 25
28%
flexibility of their returns policies and weigh the
cost of implementing multiple returns options vs
the potential impacts from lost business. When 2019 2020 Present
considering it’s often 5x more costly to attract Year over year comparison of
new customers than retain existing ones, investing consumers who made returns to a
retailer's physical store
in areas that will foster customer loyalty may win
out.13
3 Ensure Your Returns Processes Are
Sustainable
Last but not least, retailers should ensure their returns processes are sustainable.
While it’s equally important to ensure that a returns process can sustain a retailer’s
growth, this tip applies specifically to the environment.
Consumers increasingly expect the companies they do business with to be socially
and environmentally conscious. Gen Z is particularly
passionate about supporting sustainable brands, with 73%
of them willing to pay more for a product from a company
with sustainable business practices.14 Historically, retail is
notoriously harmful to the environment—and returns are
one of the biggest culprits of that waste. Every year in the
US, 5.8B lbs of returns end up in landfills because retailers
either aren’t sure what to do with them or don’t have the
5.8B lbs
of returns end up in landfills
right processes in place to resell or donate them. And with annually
the additional packaging involved in ecommerce returns,
they end up producing 14% more landfill waste than brick-and-mortar returns.15
11 The 2020 Holiday Returns Season: How COVID-19 is Changing Consumer Habits, Optoro, 2020.
12 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
13 “Don’t Spend 5 Times More Attracting New Customers, Nurture the Existing Ones”, Forbes, 2018.
14 “Gen Z Makes Sustainability Important for All Businesses,” Sustainable Investment Group, 2020.
15 Powering Resilient Retail in 2020, Optoro, 2021.
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 5Not only is it harmful to our planet to send returns
to landfill, but it’s also harmful for retailers’ bottom
lines as they lose out on the potential recouped
profit that could be gained from reselling returns
instead. There’s also the potential that these
practices will turn customers away. In our recent
survey, we discovered that 72% of consumers
72%
would be more likely to shop with a retailer who
has an environmentally-friendly return process.16
Consumers who are more likely
to shop with retailers focused on
An environmentally-friendly returns process starts with sustainability
an effort to reduce landfill waste by routing returns back
to stock, to a secondary resale channel, or to a donation partner. By automating the
returns process with easy-to-use workflows, a retail or warehouse associate can rely
on data to decide where to send a return once it comes in. And by expanding returns
drop off options to include packageless methods, retailers can cut down on virgin
cardboard usage by 26%.17
Conclusion
If there’s anything we’ve learned in the past year, it’s that life can change quickly
— retail needs to change with it. Retailers should embrace new ways of interacting
with customers making a return, either by enabling an online returns portal or
exploring a partnership that allows returners to drop off items at a convenient
location. They should also invest in technology that reduces waste; both financial
and environmental. As more shoppers become returners, retailers who enable
customer choice and flexibility will thrive, while those who don’t will risk losing
business to those who do.
16 Survey of over 3200 US consumers in April 2021, Optoro, 2021.
17 Optoro model of boxless returns, 2021.
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 6Optoro is the leading provider of returns technology for retailers and brands, using data and
real-time decision making to make returns better for customers, retailers, and the planet. From
an easy online customer returns portal, to warehouse processing and resale, we offer powerful
solutions to improve outcomes across all points in the returns process. Retailers and brands –
including Best Buy, Ikea, Target, and Staples – trust Optoro’s solution to make returns a strategic
advantage for their business and enable sustainability initiatives across their supply chain.
Learn more about Optoro’s solutions at www.optoro.com
© 2021 Optoro, Inc. All Rights Reserved. How to Drive Customer Loyalty and Revenue Through Enhanced Returns Experiences 7You can also read
