The Silver Lining of Returnless Refunds: Brand Loyalty

Recent reports that followed earnings calls from several large retailers — including, but not limited to, Gap, American Eagle Outfitters, Target, and Walmart — suggested they found a simple solution to dealing with excess inventory. Will offer: Give customers a refund for the items they wish to return, and let them keep the items as well.

It’s called returnless refunds, and while some e-commerce trailblazers have been implementing it for a few years now, the supply chain panic-driven surplus of certain items is prompting some of the biggest store chains to follow suit. A new study of 1,150 consumers across the US from my company Dotcom Distribution shows that this strategy often creates an aura that results in positive brand sentiment and returning customers. But you don’t need to be a big box retailer to implement or benefit from this strategy.

Letting customers hang on to returns is giving them — well — returns.

Sending an email to a customer saying, “Feel free to keep or donate the item you were planning to return,” key points to customer experience and satisfaction. According to the study, more than half of consumers (51 percent) said that the returnless refund experience made them want to buy from a brand again. That’s a remarkable statistic in itself, but here’s what really puts it into perspective: In 2021, that number was just 40 percent.

Perhaps it’s the enthusiasm and gratitude for getting something for free or the relief in not having to physically send something back. Whatever the case, consumers are paying positives, as 34 percent of respondents said getting returnless refunds would make them want to donate unwanted items—again, an 11 percent increase from last year.

Abandoning products can sometimes save money.

Getting a full refund for a return without a customer actually needing to return the item may seem like money out the door, but depending on the item and circumstances, the opposite may be true.

Offering a return-cum-refund is not an option for every company and the effect varies depending on the product and why it is being refunded. But when it works, the returnless refund checks several boxes on the seller’s side. Taking into account the costs associated with return shipping, labor for restocking, and refurbishment or destruction, the amount forfeited by a single return can easily exceed the value of the product.

Positive environmental impact positively affects brand affinity.

Samantha Mansfield, Head of Strategy at LiveArea EMEA, a global customer experience and commerce agency, shared with retail gazette That his company’s research found that 71 percent of consumers would change their online shopping habits if they knew that returned items would go to landfills or be destroyed. He emphasized how influential company ethics have become in consumers’ buying decisions, as well as how important it is for brands to be transparent about how they are working to drive more sustainable behavior. .

By eliminating returns, you are also reducing your company’s carbon footprint. It is not lost on consumers, and in fact, it is an issue that is growing in importance at the scale of what customers value. In 2021, 27 percent of e-commerce study participants said that offering returnless refunds made them feel like the brand cares about the environment. In 2022 this number increased to 33 percent.

Taking advantage of purchase history can help predict the response.

The type of purchase a consumer makes clearly plays a role in how they feel about returnless refunds. According to the dotcom study, 61 percent of consumers who reported buying sporting goods and toys, respectively, led the pack of people who made them want to shop with a brand again, experiencing a non-refundable refund. .

Consumers who reported buying beauty products were the largest group to report that receiving non-refundable refunds made them want to donate unwanted items (42 percent). And consumers who bought sporting goods and beauty products alike felt they care about the environment (40 percent each) when a brand offered them a non-refundable refund.

Inventory planning can be really hard to get right, and when you do it wrong, it’s easy to panic and make mistakes. Returnless refunds are the modern solution to the age-old problem. It’s worth exploring how this might fit into your reverse logistics strategy – if it works, saying goodbye to products could mean saying “welcome back” to customers.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.