Don't fee me
Returns can create a margin pinch - maybe the customer will pay?!?!
Customers say the darndest things, amirite?
From the 'be careful with survey data' file, this one from Narvar's State of Returns:
"62% of consumers say they’re willing to pay a small fee (median of $2) to get an instant refund."
Even if those survey responses may have led you to believe you can - ahem - *charge* a shopper to get their money back - BEWARE.
Customers are already outraged at the 'suggested tip' screen on your local coffee shop's POS – wait'll you ask your shopper for money back for their refund. I can hear the screenshotting now.
I get it - margins are tight. Customers don't seem to be flinching at <still> overheated inflation. But when brands start sticking their hand out for common service transactions, watch the customer fangs grow.
There’s some brand damage at stake on this. NonGMV fees create a different dynamic in the relationship. You are asking for the customer to subsidize your business operations. Maybe that’s fair. Your CFO can likely rationalize it. But, what impact will that have the next time they cart a product. Will that prior fee cause even a bit of hesitation?
Wait, there’s more:
"30% of shoppers expressed willingness to pay a fee for scheduled home pickup."
This is where a broad survey question can unintentionally mislead. The shopper hears ‘home pickup’ and can picture the convenience. About 1/3rd consider this a good trade-off, fee for time.
But… when the shopping scenario moves from artificial to real, most of those survey respondents walk it back:
"However, (paying for home pickup) adoption rate plummets to 6% when home pickup is paired with a $7 fee and offered alongside lower cost return methods."
Shoppers are conditioned to avoid fees, and this example fits the mold. You are not Ticketmaster - don’t fee me.
There are some far better ways to avoid the margin pinch during the returns process. Return incentives look to be well received - 90% of consumers can be persuaded to do an exchange rather than a refund. This response passes the sniff test, too. We see lots of merch exchange offers where the offer is greater than the order size (spend $120 for your $100 return, for instance). Overorder values are certainly enticing, especially if a different colorway or size is acceptable.
There is a connection between these two service transactions:
1 - Shoppers are allergic to fees.
2+ Shoppers are compelled by incentives (like store credit) and thresholds (like free shipping)
Swallow the bitter margin medicine of the first, and chase it with a spoonful of increased GMV or AOV sugar to get close to even.