Webinar recap: To fee or not to fee?

On November 15th, we hosted a webinar focusing on how brands can leverage fees on their returns. Loop Product Marketing Manager Vaishali Ravi and Merchant Success Manager Ben Chapman held a dynamic Q&A dialogue, delving into perspectives on fees, evolving return fee trends, and the impact observed by merchants upon fee implementation and strategic utilization.

In this webinar, we covered the following topics:

• When should brands implement fees?
• Is there a price point where customer satisfaction becomes negative?
• Can brands manually change the refund amount and return fees before issuing a refund to the consumer?
• How does Loop implement fees on mixed return scenarios?
• If a customer returns several items at once, would it be possible to apply the return cost only to a specific product?
• How can brands customize fees based on product, customers, or special situations?

Let’s jump in!

When we discuss implementing “return fees,” we’re talking about charging a nominal fee or a percentage-based fee in order to process your customers’ returns. This helps brands offset the price of shipping and handling, and can be a useful tool to incentivize shoppers to make an exchange rather than requesting a refund.

You’ll need to develop your own strategy for implementing fees, but our official recommendation is that brands start by charging for refunds first, but offer free returns on store credit or exchanges. Ideally, your returns can be a revenue retention tool for you in this way, but then you also don’t have to pay for a return that’s already costing you the full amount of your lost revenue on top of that.

Is there a price point where customer satisfaction becomes negative?

The amount that the average retailer charges to process a return usually lands somewhere between $4 and $8, but this amount has been steadily declining as time passes.

Even though the price that the merchants are charging is decreasing, the amount of refunds requested have also been decreasing—we believe this is because most brands have adopted the “free returns for exchanges, paid returns for refund requests” strategy that we recommend.

Because your average shipping label costs around $5-10, it is a bad idea to charge more than that, with some obvious exceptions. If you’re a home goods brand selling heavy items like coffee tables, for instance, shoppers will expect to pay more for a return fee than they would for, say, a cosmetics company, whose products mostly weigh less than a pound.

For these reasons, for heavy or expensive items, it’s a good idea to charge a percentage of the item’s value as your return fee rather than a flat rate.

If there’s no sensible reason for a brand to charge a lot for return fees, you’re likely to see customer satisfaction start to wane.

Can brands manually change the refund amount and return fees before issuing a refund to the consumer?

Yes! Loop has the ability to edit any return.

One example: let’s say that a customer submits a free return with a request for a refund (because you don’t yet charge for returns), and you get the box back, and the item is in bad repair or no longer eligible for return.

In this scenario, using Loop, you can go into the return and add or edit the fees that are associated for that particular customer. You can also cancel the return in this case, if the situation is egregious.

In the same way, you can also go in after the return has been submitted and edit or remove a fee that has been applied mistakenly. With Loop, we make sure you have this flexibility around return fees.

How does Loop implement fees on mixed return scenarios?

Let’s say a customer wants a refund on one item, but wants to exchange a second item in the same transaction. If your brand charges return fees on refund requests but not on exchanges, how would Loop implement fees in this situation?

Using automation, Loop will charge the fee based on the proportion of the return. If 50% (or more) of the return is an exchange, that return will be free. If 50% (or more) of the return is a refund request, we will charge a fee.

So if a customer wants a refund for two items but exchanges a third item in the same return, that customer will be charged as though the whole transaction is a refund request.

We’d recommend that brands who might find themselves in these mixed return scenarios mention this in their return policy on their site.

If a customer returns several items at once, would it be possible to apply the return cost only to a specific product?

So is it possible to handle scenarios like these without relying on that kind of automation? Yes! Using Loop’s Workflows feature.

How can brands customize fees based on product, customers, or special situations?

You can set up return fees based on product tags, product numbers, SKUs, or product types. You can also add in other conditions so that you can charge fees for the return of sales items, for instance. With Workflows, you can customize how your return fees are automated so that your customer support team does not have to go in and adjust returns on special orders or products manually. Workflows is great for complex return policies.

So there you have it—these are the basics for understanding how you can implement return fees and how to build your return fee strategy based on your needs and the needs of your customers.

For the best returns experience available on the market, use Loop. Book a demo today.