Are brands suppressing free returns?

As inflation culture becomes the norm and a pretext for changing business policy, more and more brands or retailers are looking for ways to cut costs by questioning free returns.

This paradigm shift, induced by retailers such as Zara, seems to bring us into a new era in which free online returns could soon be a thing of the past. A change in logistics justified on the basis of “sustainability” to reduce the carbon footprint and the environmental impact of transport.

Faced with this generalized increase in shipping and production costs, firms such as Zara began last year to charge UK customers £1.95 for each online return. Now, the brand is extending that policy to Spain, with a €1.95 fee deducted from the refund processed unless the product is physically returned to the store.

Zara is now extending its return charge policy to Spain, one of its core markets. The retailer’s fee of 1.95 euros will be deducted from a processed refund unless the product is dropped off in a store. #returns #retail #JHA pic.twitter.com/GSe9f1Jp2I

— Jane Hali & Associates (@JHaliAssoc) February 7, 2023

Beyond Inditex’s leading brand, according to an analysis conducted by Narvar, the leading e-commerce innovation platform for customer experience, 41% of the top 200 U.S. brands incorporated mail-in return rates by 2022.

THE FIDELITY’S DISSOLUTION

The dichotomy that is projected with this emerging marketing strategy is the loss of loyalty with those customers deeply dissatisfied with this change that has proved beneficial to some companies such as Paul Evans, which has increased its profits by $100,000 a year since the introduction of free returns.

However, this change in shopping habits leads to customers declining to accept this paradigm shift, which some brands are combating through new alternatives to make up for this additional charge by encouraging new purchases. A practice carried out by sportswear retailer Vitality, which charges a $6 fee deducted from refunds in case of returns, as well as offering 5% credits to be used on future purchases if customers buy at the time of return.

Through this policy, Vitality has reported since last August a 33% growth in revenue that it would have lost instead, while maintaining the loyalty with customers that many other companies are losing through a social cause narrative made up through the latent current of greenwashing.