Americans have a new dealbreaker when it comes to shopping, and it doesn’t have anything to do with the product itself. Increasingly, it’s the return policy, research shows.
Almost two-thirds of U.S. shoppers, or 63 percent, have either stopped shopping with a retailer or abandoned a purchase because of its return policy, according to Loop, which commissioned a survey on 1,000 consumers and 200 retail decision-makers. Loop is an AI-powered platform built for customer retention.
The survey, which was conducted by Sapio Research last May and June, explored America’s habit of returning past purchases, which, for better or worse, have become a constant reality for the retail industry.
More than half of consumers (58 percent) say they check a retailer’s returns policy before making a purchase. It’s a consideration that weighs on their minds, with 46 percent saying return fees cause them to be more careful about what they buy. Notably, over one-third of shoppers (36 percent) say they would pay a return fee if there was a “more premium returns experience,” which is higher than the 24 percent recorded in the U.K. version of the study.
“The ultimate outcome of a return experience is a major driver of customer retention, good or bad. A staggering 87 percent of shoppers report a willingness to take an exchange under the right circumstances, and the value of that opportunity is eye-popping: over $2 billion globally to the brands Loop serves today,” said Loop CEO Hannah Bravo.
It’s so important to be able to return a product that it’s also becoming more common for U.S. shoppers to resort to questionable behavior. For example, 44 percent say they previously provided a different reason for making a return rather than the exact truth, while 31 percent say they switched the original item with something else for the return.
Retailers see this play out every day. They’re becoming increasingly aware that a shopper’s experience after a purchase is almost as important as the transaction itself, with 65 percent saying that the returns experience has a significant impact on customer loyalty. They’re cognizant of the consequence of stricter return policies too, with 56 percent concerned that they might lose out on customers and 57 percent worrying about a potential backlash on social media.
They’re also observing the impact of questionable consumer behavior, with 62 percent saying false claims are among the most common form of return fraud, 54 percent saying their customers return different items, and 38 percent accusing their buyers of wardrobing, or wearing an item before returning it.
However, many retailers don’t count consumer loss as more damaging as losing actual revenue. In fact, only 13 percent of U.S. retailers identify customer churn as the biggest financial impact of returns. Instead, many of them (36 percent) cited revenue loss.
“Looking at the data, shoppers are saying that a bad returns policy has made them walk away from a brand, whereas many retailers still aren’t recognizing or acknowledging this risk,” said Bravo. “This gap represents a significant opportunity for the brands that do see returns as a driver of growth, rather than a cost center.”
