WebNews

Feb 24, 2010

Retailers struggling to live up to online return policies and guarantees

A study released this month indicates online retailers upped their customer satisfaction guarantees over the holidays, but struggled to live up to them.

Ninety-six of 100 B2C merchant websites surveyed in the fourth quarter published their return policies or guaranteed customer satisfaction, an increase of 37 percent from a year earlier, according to a mystery shopping study conducted by the consulting firm the e-tailing group. Retailers’ online policies ranged from 30- to 90-day returns to 100 percent satisfaction, with most focused on providing 100 percent satisfaction.

Nineteen percent of the retailers shopped required customers to obtain a return authorization number (RA#) before returning an item, 15 percent offered online return processing and 32 percent offered pre-paid return labels/smart labels, according to the study.

Return policies were generally less restrictive among the 16 apparel sites shopped for the study. None required a return authorization number and more than half, 53 percent, offered prepaid return labels/smart labels.

Among eight sporting goods stores shopped, meanwhile, all published their return policy/guarantee, 38 percent offered prepaid return labels/smart labels and none required a Return Authorization number.

While e-tailers might have felt compelled by the economy to bolster customer service guarantees, the e-tailing group found many companies were not living up to their promises.

“Many conversations about returns focused on the “lack of money” I would be receiving back from my return with statements such as “Once we deduct the cost of the pre-paid shipping label we’ve included, you will only be receiving a few dollars back,” noted Kylee Magno, who oversees research for the e-tailing group. “There’s a re-stocking fee, a handling fee and then the fee for the pre-paid label”, and my all-time favorite “even though you enjoyed free shipping of the item, returns are subject to the original cost of shipping deducted from the amount credited back, because we shouldn’t have to absorb your shipping costs.

Other studies, meanwhile, have found that self-proclaimed multi-channel marketers are falling far short of their brand promise when it comes to returns. Clerks at some brick-and-mortar stores, for instance, refused to accept returns of items purchased from their company’s online stores.

The topic clearly merits more discussion for outdoor specialty retailers, who are turning to web stores to drive local traffic, lessen their reliance on local weather and economic conditions and provide a great outlet channel.

Retailers expect 6.4 percent of holiday returns to be fraudulent this year, down from 7.5 percent last year, according to a survey by the National Retail Foundation. Nearly half of the merchants surveyed (46.2 percent) also report that wardrobing — the return of used, non-defective merchandise like special occasion apparel and certain electronics — has been an issue for their company within the past year.

Staying on top of returns is particularly important to outdoor specialty stores, which derive about a third of sales and profits from apparel, where online return rates can approach 20 percent. That is five times as high as return rates for many hard goods.

Regardless, the risks entailed with selling online require specialty outdoor retailers to revisit their online return policies and customer satisfaction guarantees regularly.