Returns have always been a sore spot for retailers. Between returns eating away at your bottom line on top of the cost and time to put the items back on shelves, they’re a necessary evil.
As cumbersome as returns can be, without them, retailers simply would not survive. Which is why it’s so important to have an easy-to-find return policy on your website. In fact, it may be even more significant than retailers think.
A new report from FedEx reveals that a clear, customer-friendly return policy is a key factor in securing higher conversion rates. An overwhelming 62% of consumers consider a return policy the biggest factor in deciding to complete an online purchase.
To win customers over this holiday season, FedEx’s report highlights some key factors that should be on your e-commerce return policy.
1. Consumers Prefer Free Shipping
Recent research from Morning Consult, commissioned by FedEx, has created new clarity around customer expectations—and what factors influence their decisions to buy. Unsurprisingly, saving money matters most to customers.
When asked what was on their minds when shopping, 57% said free shipping and 54% said finding the best prices. If you have a free shipping threshold, 81% of respondents will add more items to their cart to avoid delivery charges.
“While fast shipping is still highly valued by consumers, free shipping has become a key expectation influencing purchase decisions, driven in part by a heightened focus on affordability and cost savings,” Jason Brenner, SVP Digital Portfolio at FedEx, says. “While rapid delivery options remain attractive, especially for time-sensitive purchases, the ability to balance affordable standard delivery with expedited options can help retailers meet diverse consumer needs.”
This data presents an opportunity for e-commerce retailers to improve sales by setting a higher but attractive minimum threshold, enhancing the customer experience and encouraging larger cart sizes without deterring purchases.
2. Don’t Make Free Shipping Thresholds Too High
Thresholds for free shipping vary, but the largest percentage of retailers (44%) require a minimum order between $50 and $79, according to the report. Here’s the disconnect: nearly half of consumers think orders between $25 and $50 should come with free shipping.
Knowing that customers will spend more to get free shipping, retailers should test their thresholds. Discovering the right order minimum can help strike the perfect balance: increased revenue and customer satisfaction.
“I anticipate that the demand for free shipping will continue to grow as consumers seek greater value in their online shopping experiences,” says Brenner. “As more retailers recognize that offering free shipping not only enhances customer satisfaction but can also increase cart size, we expect free shipping to become even more widespread. It’s clear that free shipping is moving from a ‘nice-to-have’ to a consumer expectation.”
3. Consumers Desire Fast Paid Shipping
When customers pay for shipping, they expect to receive their packages fast—either overnight (38%) or within two days (36%), according to the report. More people prefer free shipping, unless the order is urgent. Then they’ll spend extra for faster delivery.
And here’s an added bonus: charging more for expedited delivery can boost revenue. FedEx advises retailers to consider logistics upgrades and partnerships. Tactics like outsourcing warehousing and fulfillment can increase delivery speed and create standout experiences.
4. Free Returns is a Top Purchase Influencer
According to the data, 23% of consumers prioritize free returns, with an overwhelming 62% of consumers more likely to buy online if the retailer offers free returns. Yet, surprisingly, less than half (46%) of all merchants offer free returns.
If you’re not able to offer free returns, there are still things you can do to create a loyalty-building returns process, including:
- 30% of shoppers want easy-to-navigate returns policies.
- 30% want more convenient drop off locations for returns.
- 28% want the option to return online purchases in the store.
Based on FedEx’s report, the winning formula for securing higher conversion rates includes a combination of free shipping, free returns and on-time delivery.
