The fast-fashion retailer has initiated a policy of imposing a £1.99 fee on customers for each returned package, with the amount deducted from their refund. However, H&M members will to be able to make returns for free.
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GLOAn increasing number of retailers have introduced charges for online returns, a move that typically sparks a strong reaction from consumers. However, this strategy comes with its own set of advantages and drawbacks.
Benefits of Return Fees
Charging fees for online returns serves a dual purpose in the retail industry. Firstly, it aims to reduce return rates, encouraging customers to carefully consider their purchases before finalizing them. Secondly, it can lower the frequency of returns, allowing retailers to recover costs associated with managing returns, such as restocking, refurbishing, and reselling returned items.
Moreover, it cultivates an environment of more thoughtful customer decision-making, potentially increasing overall satisfaction as customers are more likely to keep items they genuinely want. Nonetheless, some customers may view return fees negatively, perceiving them as unfriendly or punitive.
Return fees can bolster a brand’s profitability, offering an additional revenue stream that can be reinvested in product quality, customer service, or expansion. Additionally, they serve as a deterrent to return fraud.
Beyond financial considerations, this approach also aligns with sustainability efforts. By lowering return rates, retailers can contribute to the reduction of carbon emissions associated with shipping, packaging waste, and restocking.
Latest Retailer to Impose Return Fees
H&M has joined the ranks of retailers implementing return charges on online orders in various markets, following its recent introduction of return fees in the United States. The fast-fashion retailer has instituted a policy of charging £1.99 for each returned package, with the amount deducted from the refund. However, H&M members will still be able to make returns for free.
Using Returns to Boost Loyalty
H&M is hoping to entice more shoppers to join their loyalty program to enhance the overall returns and purchase experience. This program offers additional benefits like more payment options, exclusive discounts, perks, and free shipping on orders over $40.
To stay competitive and encourage higher customer spending, retailers have adopted the practice of providing free shipping. According to a study, if free shipping were no longer available, 42% of respondents indicated it would be a compelling factor for them to cancel their retail product subscriptions.
However, in recent years, more retailers have opted to impose fees for exchanges, refunds, and store credit. This shift is in response to the fact that consumers in the United States return roughly 3.5 billion products each year, with only 20% of those items actually being defective.
According to Loop Return’s CEO, Jonathan Poma, this change in pricing hasn’t led to a shift in shopper behavior, as customers understand the merchants’ need to recover costs and are willing to pay for returns as long as they receive an exceptional returns and purchase experience. Poma noted, “I think there’s like a quid pro quo that is, ‘Hey, as long as I’m getting a great experience, I don’t mind paying.’”
Source: PYMNTS
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