Offering free returns across order sizes may be a costly strategy, but doing so helps maintain brand relevance among a department store’s most active customers—potentially driving increased loyalty and long-term value. Few department stores provide comprehensive transparency across the fulfillment cycle—from shipping to returns—to give consumers the confidence to place orders and easily get into a cycle of purchases. Return information on digital platforms, however, still lacks transparency.
While most department stores send shipment confirmation emails, only 31% of brands in Gartner L2’s report on the topic offer estimated delivery days, missing opportunities to build trust over time. For example, Macy’s provides best-in-class features for customers, offering fulfillment updates to users on account pages, options to receive text updates about their shipment, and ongoing updates about their return—a feature few retailers offer. Maximizing customer loyalty and discovery by enabling free returns has advantages, but department stores must pair those offerings with special attention to the threat of exploitation or hefty costs.
Digital pure plays provide insight into effective management of returns policies. REVOLVE offsets high return volume with a reliance on private label, accounting for eight of ten top-selling brands on site, and Zalando has long boasted the efficacy of its free return policy, which is promoted across site touchpoints and encourages users to convert—returning products if necessary. However, the German pure play recently cited its personal stylist services—boxes shipped to members without fees, encouraging them to return what they dislike—as a significant offset to an otherwise costly returns policy that can eat away at margins.
Department stores must assuage customer concerns with returns and increase order value. Zalando’s initiative to boost average order value exemplifies this idea, as it helps Zalando stay relevant without suffering significant losses. Wardrobing, the cycle of customers exclusively wearing items for certain events then returning the items, presents similar problems for department stores. Wardrobing remains a threat to maximize sales for trend-oriented department stores, which then must mitigate the risk of return policy exploitation. In April, ASOS sent an email to all customers, reminding them that the policy prohibits wardrobing, and that suspicious behavior will be increasingly monitored.
Department stores can maximize the effectiveness of return policies by being more transparent with customers, and by adjusting when such policies are jeopardized