‘Returnless returns’ boost brands among consumers

Studies show consumers return 1 in 5 online purchases. This presents a challenge for retailers because the revenue generated from reselling a returned product often does not cover the costs associated with processing the return.

As a result, many leading retailers no longer require customers to return a recently purchased and unwanted product in order to get a refund — they often tell customers to “just keep it,” meaning they get both the refund and the item. This “returnless returns” strategy has become a common practice. In a 2023 survey of more than 500 retail executives, 59 percent used returnless returns compared with only 26 percent the year before. And cost cutting is not the only benefit for these retailers, according to new research from the University of Notre Dame. Returnless returns can increase brand support by fostering goodwill, according to John Costello and Christopher Bechler, assistant professors of marketing at Notre Dame’s Mendoza College of Business. Their study, “Just Keep It: When and Why Returnless Product Returns Foster Brand Support,” is forthcoming in the Journal of Marketing Research. They conducted nine lab, field and online studies that showed consumers who are offered returnless returns are more likely to patronize the brand and share positive feedback compared with others doing standard product returns. They found this to be true when several factors are in place. “Specifically, returnless returns increase brand support when proof of the problem with a product is not required, the decision is framed as specific to that consumer and situation, the brand provides a consumer or environmentally centric motive for the decision and the brand suggests donating the kept product,” Costello said.

This contrasts with narratives in the popular press and with data from the team’s pilot study with retail professionals, which both point to cost as the primary reason firms decide to implement returnless returns. “Surprisingly, we also find that increased brand support generated through returnless returns can sometimes be greater than the support generated when a consumer appears to be happy with a product and does not initiate a return,” Bechler said. The study explores both situations where consumers get to keep the "returned" product plus get their money refunded, as well as situations where they get to keep the "returned" item and get a replacement item. The effects hold for both of these situations. Some brands, including Chewy and Bombas, offer a blanket returnless policy for all customers and situations, while others, like Amazon and Walmart, use a case-by-case basis. While blanket returnless policies may appear more likely to boost brand support because consumers may feel they could be excluded by brands with selective use, the study shows the opposite is true. “Drawing from our theory that offering returnless product returns boosts brand support because they increase brand warmth, we find that returnless policies implemented on a case-by-case basis are actually more effective for a couple of reasons,” Costello said. “The consumer feels they are getting special treatment. Also, because they are getting human interaction rather than an automatic email, the customer feels additional warmth toward the brand. So, increasing the level of ‘humanness’ in digital interactions has proven beneficial.” Brands can choose to not provide a reason for why they are using returnless returns, or they could point to managing costs or minimizing environmental harms. However, in the interest of improving brand support, the study provides managers with practical guidance about how to communicate with consumers during returnless returns. Suggesting that customers donate the kept product boosts perceived brand warmth and support, as does providing reasons that articulate the brand’s desire to put the customer first in their product return processes. Bechler explained, “The customer-centric message we used in one of our studies was, ‘When managing returns, our primary goal as a company is to make our customers’ lives better. With this in mind, there is no need to return the items in question to receive your refund. We appreciate your business and want to make this process as seamless and positive as possible for you, so please do whatever you want with these items.’” The findings offer important insights for firms that are designing or updating their product return policies and would like to improve how they are viewed by customers who seek to return purchases. Contact: John Costello, 574-631-5171, jcostel4@nd.edu; Christopher Bechler, 574-631-1202, cbechler@nd.edu   Originally posted on ND News.