What retailers don't want you to know — some actually prefer that you keep your returns and unwanted items... and are willing to pay you to do so.
In today’s increasingly automated world that emphasizes easy, quick, and convenient shopping, consumers are able to buy anything, anywhere, at any time. Retailers have widely adopted the “consumer-first” mindset to make shopping a pleasant and trouble-free experience with benefits like fast shipping, free returns, and full refunds. The small inconveniences that buyers face when returning unwanted items (such as time and effort to make the return) are minor in comparison to what some retailers are left with.
High inventory levels have become a big problem for some retailers. A new discovery indicates that some retailers are finding it easier to pay customers to just keep their unwanted items.
Retailers face an estimated $264 billion worth of merchandise returned each year, according to a report by USA today, and the low margin from reselling returned items is not enough to justify accepting the return. Marrie Rossiter pointed out that processing returned merchandise can cost businesses between 20% and 60% of the original item price, which has heavily incentivized minimizing costs and time associated with product returns.
When customers return their unwanted, damaged, or used items, retailers can either place items in good condition back on the shelf at a full or discounted price, refurbish damaged items and give them to liquidators to sell at a discount (either in the US or overseas), or hire third-party firms to handle their merchandise returns. Each of these solutions, however, comes with more problems. Returned items sold at a discount typically lessen the value of the company, shipping returned items to liquidators overseas is difficult due to recent container shortages, and hiring third-party firms is equally, if not more, expensive than processing the return internally. In light of these complications, retailers have turned to a “Just Keep It” policy.
In addition to the high cost of returns and excessive inventory levels, most unwanted items end up lost, damaged, or wasted in landfills – creating a greater issue for society at large. Thomas S. Robertson pointed out in his interview with Wharton that there “are statistics around how many tons of clothing wind up in landfills per month, and that is a concern for many of us who are worried about sustainability.” According to CNN Money, “5 billion pounds of returned items end up in the trash heap.”
In a recent customer testimony about their experience with Chewy – an online retailer of pet products – the customer accidentally ordered the wrong type of dog leash. Instead of sending it back, Chewy asked the customer to donate the leash to a local rescue or shelter. Then, the customer ordered the correct leash and accidentally received two leashes, but despite their own order mistake, Chewy said to not return the second leash, but donate it as well. This new policy benefits the customer by eliminating the hassle of making a return, but it also builds company rapport and improves their CSR ratings. Encouraging social good over personal gain increases customer appreciation of a brand and hopefully builds brand loyalty in the long run.
So, what does a new era of “returnless returns” mean for most retailers? Obviously, there are consequences with this idea. Companies may become victims of fraud if customers who are aware of the policy start abusing the system by seeking free merchandise. Some companies are trying to hide their ‘Just Keep It’ return policy so that customers do not take advantage of it for the wrong reasons.
Whether retailers like it or not, issuing refunds without accepting merchandise may be the new path forward for returns as we see it. Not only is it more costly to return items, but it also contributes to a massive amount of wasted product. This shift in managing returns may cause some retailers to think differently about their brand moving forward. With less waste, lower shipping costs, decreased excess inventory, and greater social impact, retailers are helping their company and their customers as they recognize what is most beneficial for all.
