Returns are a constant source of stress for retailers: about 8%–9% of brick-and-mortar purchases and 20%–30% of eCommerce purchases are returned.
These returns result in added costs (think shipping, processing, and restocking processes). Even worse: sometimes the returned merchandise can’t be resold because it’s broken or single-use only.
It’s an expensive practice—according to UPS data, the cost of processing returns can often be between 20%–65% (or more) of the cost of the goods sold.
All of this contributes to why returnless refunds are gaining traction. Here’s what you need to know about them.
What are Amazon refunds?
An Amazon refund is a refund that’s granted to a customer without requiring them to return the merchandise.
Amazon first introduced the concept in 2017 to reduce costs and friction associated with returns. Now, when a customer requests a return, Amazon sellers have a choice to tell the customer to keep the product.
In the intervening years, returnless refunds have increased in popularity as store owners continue to look for ways to cut down on the costs associated with returns and to boost customer satisfaction.
Benefits of returnless refunds
Even though returnless refunds might seem like a bad deal for the seller, they can provide a surprising number of benefits for both customers and retailers. Here are a few to consider.
1. Lower costs in the long run
Returnless refunds can actually be cheaper for the retailer than having customers ship the product back. Data indicates that 11%–13% of returned purchases cost twice as much as their sale price to process. Sometimes, you lose less money in the big picture by removing the return equation.
2. Less friction for customers
The returns process is often full of friction points for the customer. More often than not, returning a product means initiating a return on-site or over the phone, printing out a shipping label, finding a suitable package for the product, packing it, and then driving to a drop-off location or post office to send it back. And that’s if returns are free for the customer. If not, customers have to wait in line to purchase return postage, too.
Returnless refunds remove every one of those steps except the first, which vastly improves the process. And if there’s one thing every store owner should know, it’s this: a customer who has a positive experience making a return is more likely to, well, return—as a repeat customer.
3. Faster refunds
Refunds often take weeks to reach a customer’s bank account since they don’t get processed until after the item is back on warehouse shelves. Customers find it exceedingly frustrating to have their funds tied up by a company whose product they don’t even have. A returnless refund releases the refund almost immediately, thus eliminating this negative experience entirely.
4. Improve customer loyalty
Returnless refunds that encourage shoppers to donate their would-be returns are a simple way to boost customer loyalty. By allowing shoppers to donate the item, you remove the hassle of going through the returns process and instead create positive feelings of goodwill (which they’ll then associate with your brand). Those positive experiences can create brand evangelists and transform first-time shoppers into long-term loyal buyers.
Casper, for example, does a version of this with its returned mattresses (as long as they’re clean and in good condition.)
5. Opportunity to reach new customers
For items that aren’t broken, allowing the customer to keep the item gives them an opportunity to pass the item along to someone else who may end up loving the product.
In that way, a returnless refund can act as a sample to bring in a new customer, meaning it can actually increase margins rather than eating away at them with a costly returns process.
6. Good for the planet
Returnless refunds are better for the environment. Skipping the return shipping process conserves natural resources such as gas and plastic.
In fact, this benefit is a driving factor behind Returnly’s Green Returns offering. Using AI, Green Returns can make the decision to offer a returnless refund in real-time for you.
Examples of retailers that offer returnless refunds
Several large to mid-size retailers with eCommerce arms already offer returnless refunds, and their use cases illustrate various ways this approach can be deployed by store owners of all sizes.
1. Glossier
Glossier is a cosmetics brand whose policy is to make returns as easy as possible. While it doesn’t mention returnless refunds in its official returns policy, its approach is set up to get each customer personalized support for the return. This makes it easy for customer support agents to make the call around whether or not the customer should just keep the product.
2. Target
The Wall Street Journal recently reported Target has officially joined the ranks of returnless refunders. A spokesperson for Target said they only offer returnless refunds in a very small number of cases where it’s easier than returning the item and that the practice has unofficially been used since 2018.
3. Chewy.com
Chewy, an online pet supply retailer, has a very generous return policy. It officially offers returnless refunds on a case-by-case basis for prescription medications. However, the internet abounds with stories of its generous returnless refunds.
For instance, it’s common practice for the brand to refund a bereaved pet owner’s final automatic food purchase, telling them to donate the food. But it’s been known to offer a returnless refund for other reasons as well. At one point, it told a customer to donate a cat harness that was purchased but too large to her local shelter (and sent her a free replacement).
Chewy uses returnless refunds as a way to stoke goodwill with its customers and gain a bit of positive social chatter at the same time.
4. Thinx
Thinx is a retailer that sells period underwear. The nature of its product is very personal and certainly single-person use (made to be reused by the same person). Returnless refunds are not officially a part of its policy, nonetheless, Thinx occasionally offers them.
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So, are returnless refunds right for your business?
It might be time to consider offering returnless refunds to your customers.
Even if you only offer this option as a value-add for your very best customers, it can be a smart way to increase your customers’ loyalty and deepen relationships long term.
That said, retail is changing rapidly, so it might not be much longer before customers expect this kind of treatment.
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