E-commerce Returns: the pros and cons of 3 different return shipping strategies

By Paazl
January 4, 2018

E-commerce returns are a much-debated topic. Are they seen as a burden? Or do they provide a unique chance to satisfy customers? Lately, we see more and more evidence pointing in the latter direction. For example, a stunning 91% of customers claim a returns policy directly affects their purchase decision. Yet, only 53% are happy with current return processes. So, what can you – as an online retailer – do to make more customers happy? In this post, we will take a look at the different ways in which your customer can ship an item back to your warehouse – each with its own pros and cons.

Customer is fully in charge of returns

We start off with the simplest form of return shipping: just let your customer figure things out themselves, including which carrier to use. On the plus side, this requires absolutely zero work on the part of the online retailer. It might even reduce the number of items coming back, as some customers don’t want to put in the extra effort.

However, there is a major downside as well: you are left completely in the dark when it comes to the number and type of incoming returns since you don’t have access to the parcel tracking code. Who knows what items are coming back? And when? Using this strategy means that you cannot plan ahead because your inbound department does not know what the actual stock level is at a given time. And what happens when a parcel goes missing in transit?


An example of an online store in which customers are responsible for returns shipping

Additionally, this strategy is the perfect recipe for complaints and it increases the chance of customers choosing to shop at your competitors the next time they want to buy something. This is pretty logical: who wants to search for a nearby location, remember the right returns address, and wait for their parcel to be labelled? That’s just as fun as watching paint dry.


• The customer is not limited to specific carriers or locations

• No extra (direct) costs for the retailer

• Possibly reduces the amount of returns as extra effort is required


• Zero visibility on incoming returns for the retailer

• Not very customer friendly: dropping off an unlabelled parcel takes time, effort and sometimes money


A returns label included in the box

For the reasons highlighted in the first strategy, more and more retailers have chosen to provide customers with a ready-made return label. This is a great step towards frictionless and frustration-free returns. And perhaps even more important: by generating the shipping labels yourselves you gain instant access to the parcel tracking code, allowing your customer service and inbound department to accurately track returns. This way retailers will have a better understanding of the returning items and correspondingly better manage stock levels.

Nike.com include a peel-off UPS returns label with each shipment

Furthermore, it means that you can send out branded Track & Trace emails to keep your customer updated. By adding the return shipments to your total shipping volume, you might even get an extra discount from your carrier.


Convenient or confusing? MissGuided includes labels for 5(!) different returns options with each order

Still, there are downsides to this strategy. Firstly, you will print a lot of labels that end up unused, which is costly and bad for the environment. This will only get worse when you start offering multiple returns options, using different carriers. Secondly, multiple returns options are still a rare sight today, but for how long? According to research by BarclayCard (2016), 49% of consumers already expect a retailer to offer multiple returns options, requiring the retailer to include multiple shipping labels in the box. Where do you draw the line between convenience and confusion?


• Full transparency for all parties involved

• Ability to update customers via branded Track & Trace updates

• Returns shipping volumes are added to total volume, leading to lower shipping rates

• Low pressure on customer support


• You will print a lot of labels that end up unused – costly and bad for the environment

• Confusing when you want to offer multiple returns options

• Easy returns process might drive up returns rate 

Returns label via a self-service portal

This strategy requires that customers create their own (digital) return labels, by entering their details via a self-service portal. Besides the benefits already mentioned, this has an extra advantage: you can use the self-service portal to capture the reason for returns well in advance. Using this method, you will know exactly which product is coming back, and in which state. Depending on the answer, you can even decide on the course of actions such as offering reparation or an exchange.

Is the item broken? Or is there another reason? Dutch online retailer Coolblue asks consumer to fill out a short questionnaire on the item up for return

The main reason why retailers do not adopt this strategy is that the extra hassle it creates for customers. Printing a label and taping or gluing it onto the box is a lot more work than simply peeling off a sticker that was included in the box. We will likely see more retailers moving over to this strategy as the demand for multiple return options grows.


• Know which items are coming back, well in advance

• Digitally capture the reason for return

• No waste of unused shipping labels

• Easy way to offer multiple returns options


• Extra hassle for your customer, who has to print and tape the label on the return box

• Costly to develop and implement  

A selection of returns methods available at ASOS

Another reason we will likely see more retailers moving over to this strategy is the growing demand for multiple returns options. British shoppers at ASOS, for example, can choose between no less than 9 different return methods, for free. But instead of stuffing each box with a stack of return labels, the company send customers over to a returns portal via which label can be generated on demand:


ASOS customers can print a custom returns label via a self-service portal: a great way to expand your return option offering

Drop-off or pick-up?

Go ahead and compare and consider what return label strategy works best for you. Ready? Great! The next thing you have to also think about is the return methods that you want to offer to your customers.? Let’s take a look at the different return shipping methods:

Carrier locations

British shoppers at H&M can choose to drop-off at Hermes or Royal Mail – both using labels included in the box

The first, and most common way, is using the drop-off points of one (or more) carriers. Today, most major carriers operate with a parcel point network in their target countries, which can be used to pick-up or drop-off parcels. When deciding on a carrier network, take a close look at the number and density of locations: more locations equals more convenience for your customers.

Pick-up on demand

Dutch online department store Wehkamp offers customers a choice between drop-off or a pick-up in a chosen time-slot

Want to make returns as easy as home delivery? With the second way, you save your customers a trip to the local drop-off location by having your carrier pick-up the return item(s) at their doorstep. This next-level service is not as common as drop-off points, but it is growing in popularity. A great example is Return-on-Demand as introduced by Zalando. Using local carriers or bike messengers, the German fashion store is able to pick-up returns in time-windows as short as one hour.

Return in-store

As a retailer with stores, offering in-store return of online purchase is a no-brainer

Finally, there is the option of in-store returns. For omnichannel retailers, who operate both online and offline, offering this method of returns is a no-brainer. It is a great way to re-connect with customers, and possibly convert a return into an exchange for another item or perhaps even additional sales. And even better: your customers just love in-store returns. A 62% majority of consumers prefer returning online purchases to offline stores, if such option is available.

This puts pure online players one step behind their retail equivalents. But for how long? Companies such as Doddle in the UK and Happy Returns in the US are helping e-commerce only create a more customer-centric returns experience, with the level of service you would normally only expect in ‘traditional’ stores. Happy Returns operates a network of physical “return bars” in malls where customers can return items brought from pure players such as Everlane, Chubbies and Tradesy for immediate refunds. The bars can be found in over 50 locations throughout the US, with 150 more planned.


With returns playing such an important role in driving (repeat) purchases, we see a clear trend towards hassle-free return policies. Retailers are no longer ignoring this unwanted side-effect of e-commerce, but instead are embracing it to delight their customers. At minimum, this means providing customers with a ready-made return label so each party can trace the shipment back to the warehouse. But the leaders are already doing more. Multiple return options are no longer a novelty, and a pick-up at home might soon be as common as a delivery.

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