Survey: Customers Want Flexible Return Policies

When Matthew Card tried to return a ski jacket to L.L. Bean's flagship store in Freeport, Maine, he was pleasantly surprised.

Card, a marketing manager at Davies Murphy Group in Burlington, Mass., bought the jacket online and could not produce a receipt or even an exact amount of the purchase price. Despite that, "they didn't give me a hard time. The only information I had to provide was the approximate amount the jacket cost at the time and around the date when I purchased it," he told CRM Buyer.

Card received a full refund, which he put toward a new ski jacket, a red-gray one as opposed to the green one he did not want.

Card's experiences are not all that unusual -- at least not in 2007. A few years ago, though, he might have left the store with his green jacket in hand.

KPMG's New Retail Survey

Even as e-commerce settles into maturity, however, retailers and their support system of e-commerce service providers and vendors continue to make incremental improvements in their return policy strategies.

Unlike in previous years, the big attraction for holiday shoppers in 2006 was neither advertising nor special offers, according to KPMG's newly released annual National Shopping Behavior survey.

Rather, 81 percent of consumers surveyed said they shopped at stores that carried the items they were looking for, and a whopping 75 percent said a simple return policy was a deciding factor. Price, according to the survey, was secondary, cited by just 19 percent of respondents as influencing their choice of a a retailer.

By contrast, respondents last year said price, selection and convenience were most important to them.

Return Policy a Must

Return policies are becoming more important to shoppers, particularly as they cross channels more often, John Rittenhouse, KPMG's national service leader for operations risk management told CRM Buyer.

The shift to online buying appears to be stabilizing, according to the survey, with only 5 percent of shoppers switching a larger share of their holiday budget to the Internet in 2006, compared with 6 percent the prior year.

As the new survey also found, online shopping remains a clear favorite among most buyers -- 62 percent of all respondents said they used the Internet to research an item, and 54 percent actually made a purchase.

Predominantly, online shoppers were between the ages of 25 to 44, with incomes above US$50,000.

What Consumers Want

Retailers have finally developed viable cross channel return strategies, as a result.

"Consumers want to have a choice of returning an item bought online to a bricks and mortar store," Rittenhouse said, "or, for that matter, to be able to pick up something ordered online at a nearby store."

What they want is the convenience of a completely homogenized retailer, he added.

For the most part, they are getting it.

The largest retailers, such as Wal-Mart (NYSE: WMT) and Best Buy (NYSE: BBY), have systems that allow customers to return goods to their stores, Eugene Fram, a marketing professor at Rochester Institute of Technology's Business College, told CRM Buyer.

"Some might have restrictions, such as only offering merchandise credit in place of a cash refund," Fram said. "A 'bricks and clicks' operation that requires online customers to handle the time and financial costs [of returning] merchandise through the mail or UPS is only hassling its clientele. It never pays in the long run to hassle customers."

Glitches Remain

The return processes that retailers have in place, though, are not perfect. One problem they still grapple with: how to handle items not carried by a particular store.

"Some retailers, such as Macy's, are targeting their merchandise selections to specific customer groups surrounding each store. Consequently, handling the return of merchandise not carried by a specific store will be an increasingly costly problem that must be addressed," said Fram.

Vendors and service providers are becoming more granular with their product offerings and claim that even these one-off problems will be solved as newer generations of products and applications come online.

Real World Example That Works

UPS, for instance, has a return portfolio that allows even small businesses to mimic the return strategies of an Overstock.com or Amazon.com (Nasdaq: AMZN), said Steve Holmes, a spokesperson for the shipping giant.

UPS' Electronic Return Label system allows a retailer to send a customer a return label via e-mail. A more advanced solution, its Return on the Web product, is embedded into the retailer's Web site.

The retailer, Fram explained, can set its own business rules concerning the return policy -- rules that can include whether a return should be permitted at all and a means for automating the various addresses to which certain SKUs must be sent.

"What is great about all these applications is that both sides can access tracking technology to see the status of the return," said Holmes. "If nothing else, that saves a call from the consumer into the contact center."