What Does Free Returns Mean To Your Ecommerce Business?

Table of Contents

Last Updated: April 2024

Product returns are part and parcel of eCommerce business. But, does that have an effect on your company’s faring? Should you offer free returns to your customers? Let us discuss on,

What Does Free Returns Mean?

Quite obvious, isn’t it? Yes, it is as simple as you not charging your customer for return shipping of a purchased product, to be sent back to you.

There could be a number of reasons why your customer returns a product, like – defective or damaged, the wrong item received, quality not good, late delivery, etc.

79% of customers envisage free return shipping from retailers. Not a small number, right?

Customers expect return shipping to be free as they cannot try or test the online product while buying. And so it is essential for eCommerce businesses like yours to offer free return shipping to your customers.

But how many of you offer the same?

eCommerce returns statistics show that only 49% of online retailers offer free return shipping services.

Every eCommerce business including yours would want to limit the rate of returns to run a sustainable business. Yet, the average return rate of the eCommerce business sector accounts for 20% to 30%.

Let’s now look into the impact of free returns on your ledgers.

What Is The Financial Impact On a Company When a Customer Returns a Product For a Refund?

A product return has a direct effect on the cost of goods sold which includes the basic expense of raw materials and labor costs. So when a product is returned, the sales cost decreases. Which means it is directly affecting your profit margins.

cost of returns
Source: easyship.com

The above table clearly shows you the figurative calculation of how much profit/loss you make after a single product return. During 2021, online retailers lost around $218 billion only due to product returns.

Providing a seamless returns process is also inevitable for your company as it is an integral part of your customer experience with your brand.

The PwC survey shows that the future of customer experience (CX) is projected as 1 in 3 loyal consumers are too likely to leave a brand after just one bad experience with the company.

And so, to meet the returns requirements, you will be naturally thinking along the lines of expanding your returns and fulfillment team. Now, the question is, why should you consider offering free returns to your customers?

Benefits of providing a satisfying Customer Experience with your brand:

66% of online shoppers check the return policy before placing an order.

Not only that, 62.58% of purchasers expect online businesses to give a product return window of 30 days.

Meanwhile, 58% of buyers insist on a ‘no questions asked’ return policy.

Listening to your customers and offering them the best customer experience at every stage of your business should be the core concentration for you to successfully grow your business. Because we know why.

  • You can turn an unhappy customer into a happy and loyal customer.
  • Increases the probability of successfully retaining your existing customer as you are aware, acquiring a new customer takes 5 times the marketing expenditure incurred in retaining an existing customer.
  • Increases customer satisfaction rate.
  • Boosts your brand loyalty.
  • Encourages referrals or word-of-mouth marketing by your existing loyal customers leading to new conversions.

These are the main factors that drive an increase in your return on investment (ROI). Hence, providing a great returns experience to your customers is pertinent to increase your customer lifetime value with your brand.

Still, feeling the ‘Returns’ a bitter pill to swallow? Let us also suggest some remedies here.

Methods to check your losses due to Free Returns

Number# 1 Read your returns analytics often and optimize the quality of your products/services accordingly.

Number# 2 Learn from your customers’ feedback on returns and implement necessary measures to reduce future return rates.

Number# 3 Resolute to maintain the consistent quality of your products or services. Since your customers cannot touch and try your online products, they are anxious until they receive them in their hands. They are happy when they receive a good quality product and stay loyal to your brand.

Number# 4 Improve the packaging quality and revamp the shipping methods. As we already saw at the beginning of the article, customers outrightly reject and return damaged/defective products.

Number# 5 Embrace automation wherever possible as automated returns management will help save you time and money.

In the end,

Free returns necessarily do not mean heavy losses to your business if you are aware and alert of the factors affecting it. And that’s exactly what we brought to you here in this article, today.

If you still feel stuck up, simply look into Saufter. This complete customer support solution helpdesk software will help you save up to 50% time and revenue through, 

  • Automated returns/refunds/exchanges,
  • Self-help portal to provide your customer with a better returns experience,
  • Automatic anti-refund strategy workflow,
  • Instant order notifications to you to offer proactive customer support,
  • Along with six months free credit code.

Try all these returns management tools plus other customer support tools here.



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