Business tips

Christmas returns, part 1: How to handle post-Christmas returns

From accepting returns without receipts to covering the cost of shipping: we look at five questions you should ask yourself now to prepare for post-Christmas returns.

While e-tailers busily distribute their wares in the months preceding Christmas, January and February are all about returns. According to online marketplace Gumtree, 71 per cent of Australians received unwanted presents last Christmas – and it’s safe to assume that many made their way back to virtual, as well as physical, shelves.

Having a well-defined Christmas returns policy will not just help you prepare for the deluge, but also enhance your value proposition. The latest UPS Pulse of the Online Shopper™ survey reveals that 67 per cent of consumers review a retailer’s return policy before making a purchase, while 16 per cent will abandon their cart if the policy is unclear.

Here are five points to consider when formulating the terms of your Christmas returns policy.

1. Will I allow change-of-mind returns?

Australian businesses are not obliged to accept a return if the customer got what they asked for but simply changed their mind, found it cheaper elsewhere, did not like the item or had no use for it. But as competition in the online market gets tougher and customer expectations escalate, more and more retailers are going above and beyond what’s required of them. Australian fashion e-tailer The Iconic, for example, is one of a growing number of online stores that allows customers to return merchandise free of charge, even if they’ve simply changed their mind.

2. Will I offer free return shipping?

The Australian Competition and Consumer Commission (ACCC) states that it is reasonable for a seller to cover freight costs if customers want to return faulty goods, or if an item needs to go back to the manufacturer. For all other returns, it is the responsibility of the customer to arrange – and pay for – transportation.

That said, the offer of free return shipping is a major drawcard for customers. A 2012 study found that when companies introduced free return shipping, sales increased by up to 357 per cent over the next two years. In contrast, companies that asked customers to pay for return shipping saw sales decrease by 74 to 100 per cent.

Australia Post offers a range of returns solutions, whereby businesses can decide whether they or the customer pays for return shipping. Regardless of who foots the bill, almost half the respondents in the UPS survey said it’s important to provide access to an easy-to-print return label or include one with the original parcel.

3. Will I accept returns without a receipt?

When it comes to returns, gift recipients have the same rights as customers who buy directly from a store; however, they are often unable to provide proof of purchase. To pre-empt this situation, you might consider adding a gift option to your shopping cart; when selected, you could include a gift receipt with outgoing parcels. However, given that monetary refunds must be provided to the original form of payment, gift recipients are most likely to walk away with an exchange or store credit.

In the absence of a gift receipt or any other proof of purchase, businesses are not required to accept a return. Nevertheless, as a gesture of goodwill, you could offer a credit note or an exchange equivalent to the item’s current selling price.

4. Will I offer full refunds for seasonal or discounted stock?

Customers are entitled to a full refund if they encounter a major problem with their purchase regardless of whether the item is seasonal or now available at a reduced price. For all other cases, it is up to individual e-tailers to determine their policy (though most would honour the original price when a receipt is presented).

5. How long is my return window?

While retailers cannot enforce a time restriction for the return of faulty products, they can set a time limit for everything else. According to the UPS study, the average shopper expects to have about a month to return an item to an online retailer. In some cases stores may nominate a shorter ‘cooling-off’ period; at the other end of the spectrum e-tailers such as Zappos give customers 365 days to return unwanted goods. Many retailers even extend their returns window over the holiday period.

Whatever returns policy you implement over Christmas, remember that convenience and transparency are key to delivering a positive customer experience and encouraging future sales.

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