Study: Simpler Online Returns Make Happier Customers

Jan 11, 2006 8:15 PM  By

Online retailers need to view returns as a key component of consumer marketing rather than as an annoying disturbance in the supply chain.

Kenneth Boyer, director of The Last Mile Supply Chain Center research group at Michigan State University, describes returns as the bridge that connects marketing and fulfillment. Marketers want returns to be accepted as a way to help build trust between consumer and company. Operations workers, however, tend to see returns as doing twice the work for little reward.

But to keep customer loyalty strong, Boyer says, making the return process easy and straightforward is key. In a recent study, the center examined responses from 464 customers who returned items ordered online at 1-800-PetMeds, Backcountry.com, eBags, 6PM.com, and Office Depot in November and December. Among the findings:

  • The time spent by customers in preparing an item for return, contacting the company, and sending the package averaged 27.2 minutes.
  • Customers were generally “very satisfied” with the instructions for returns, the convenience, and the overall process, but there was considerable variability from company to company.
  • Not surprisingly, there was a strong relationship between the time it took customers to return an item and their satisfaction with the process–the longer it takes, the less satisfied they are.
  • There was also a very strong relationship between customer effort and the likelihood of the customer making future purchases from that merchant—the less effort required, the greater the likelihood of making future purchases.
  • Customers received confirmation that the merchant had received their return within 2.51 and 6.84 days. They received credit within 5.54 to 10.34 days and received replacement products within 1.61 to 11.15 days.

“The results of the study clearly show that retailers that handle returns smoothly and make the process relatively easy gain business in the long run,” Boyer says. “Customers compare different retailers based on their experiences, and a positive or negative experience can make or break a retailer.”