Returns cost merchants a lot of money, but do not necessarily damage their reputation. So says Alec Minnema, who will receive his PhD in January with his research on returning online purchases. At the Webwinkel Vakdagen, Minnema explains how returns can ensure loyal consumers and how positive reviews contribute to a higher return rate.
With the emergence of free returns, online shopping has gained momentum. If consumers do not like a particular product, they send their purchase back for free. As a result, online shops get around 30 per cent of their orders returned. Wehkamp recently admitted that up to 40 per cent of orders are returned, and at German etail giant Zalando, the percentage is as high as 50 per cent. This costs webshops a lot of money, Minnema argues in conversation with LogistiekProfs. "The logistical costs of returns are very high. A product has to be returned to the distribution centre, checked there and packed again. Moreover, that item cannot be offered online for about two weeks."
Expectation management
The PhD research Minnema conducted at the University of Groningen focuses in particular on the link between reviews and customer return behaviour. "Besides a clear product description and the right pictures, consumers value reviews when making a purchase. The more reviews, the lower the return rate." Yet those reviews also have a downside, warns Minnema. "Data from a major retailer show that overly positive reviews actually raise expectations. As a result, a product disappoints more often and the order is returned more often." Minnema advises online retailers to actively ask for reviews even from customers who return their products. "By having all customers write reviews, you ensure good expectation management."
Loyal consumer
Minnema, now working as a consultant at Ordina VisionWorks, researched the relationship between returns and consumer loyalty. On that, he says: "Returning purchases is not always bad news for an online shop. In fact, if you handle a return neatly and refund the money on time, the consumer's experience is positive and they are more likely to return. So returns can contribute to loyalty."
However, recent research by the Consumers' Association shows that many etailers do not follow the rules on returns. They are obliged to refund the purchase amount within two weeks. 32 per cent of webshops are said to refund late on occasion. Online retailers are also obliged to refund delivery costs if the consumer chooses to return the entire order. Again, companies do not always seem to take this into account: 36 per cent of online shops did not refund delivery costs in the Consumers' Association's survey.Such practices do cause reputational damage, according to Minnema. "If a customer has to call after his money, he will never buy from that webshop again."
On Thursday 19 January, Alec Minnema will give the lecture Product returns: a curse or a blessing? Would you like to attend? Then you can register here.
