Report: Digital Natives Treat E-Comm Returns as Regular Part of Buying Process

With e-commerce sales hitting an all-time high of nearly $400 billion in 2016, the online returns process has become a critical moment in the customer experience. This is especially true for affluent shoppers and those under the age of 30, according to the report "Making Returns a Competitive Advantage" published by Narvar, an enterprise-grade post-purchase experience platform. Narvar surveyed nearly 700 U.S. consumers who returned an online purchase in the past 12 months to understand people's attitudes towards returns when shopping online.

"An online return is a critical moment in the customer journey. Retailers have an opportunity to impress and delight customers, especially high-value segments like Millennials and affluent shoppers. These are digital natives who treat returns as a natural part of the buying process and have come to expect convenience and transparent communication," says Amit Sharma, CEO of Narvar. "If retailers can meet these high expectations, they can use returns to improve customer satisfaction, inspire loyalty and fuel new revenue streams."

There are more than 75.4 million Millennials in the U.S. alone, and they make 54 percent of their purchases online. As they buy more online, they return more too. Yet, retailers are not meeting expectations, with 48 percent of Millennials saying returns are a hassle. As many as 60 percent of Millennials admit to keeping purchases they dislike because they don't want to deal with the hassle of returning them, which is 18 percent higher than shoppers over the age of 30.

Interestingly, high-income shoppers have similar perceptions and behaviors as Millennials when it comes to returns. They are also 1.5 times more likely than the average consumer to return an online purchase. This signals a new opportunity for retailers to differentiate themselves by addressing consumers' desire for convenience, communication and flexibility in the post-purchase experience.

"Returns are the new normal," said Sucharita Mulpuru, a retail industry analyst who collaborated with Narvar on the study. "As the study shows, most shoppers are frequently returning online purchases, while remaining loyal to brands if they have a positive experience. Retailers who want to remain competitive will find ways to reduce friction in the returns process, whether that's communicating more updates, providing more transparency, or offering free return shipping."

Key findings from Narvar's "Making Returns a Competitive Advantage" Report include:

The bedroom is the new fitting room
Online shoppers today are buying to try, with the intention of keeping their favorite item and returning the rest. This trend, called "bracketing," is most common among Millennial, high-income and female shoppers. This represents a significant opportunity for retailers to transform returns into an experience catered toward the consumer's needs. It also signals that returns are not the end of the customer relationship, and can drive both loyalty and new revenue.
  • Women, those under the age of 30 and high-income shoppers are most likely to "bracket" — order multiple items, intending to return some.
  • 44 percent of women surveyed have done this in the past year, compared to 30 percent of men.
  • 45 percent of shoppers aged 18-29 have done this in the past year, compared to 38 percent of shoppers over the age of 30.
  • 48 percent of high-income shoppers (those who make more than $100,000/year) have done this in the past year, compared to 31 percent of the rest of the population.
Bracketing is most common for apparel and home goods.

E-commerce drives in-store foot traffic with convenient returns
The survey found consumers like returning online purchases in stores, and retailers who make this process easier earn a competitive advantage. Shoppers like to return items to stores because they get immediate credit back for their return and they can shop for other items while they are in the store. This is especially true for high-income consumers and shoppers under the age of 30.
  • Nearly half (47 percent) of shoppers say that it's easier to return on online purchase to a store.
  • Shoppers like returning items to stores so they can get immediate credit (35 percent) and so they can shop for other items (28 percent).
  • Millennials are even more likely to go in-store to return an online purchase. 55 percent say it's easier to return an online purchase in-store because they like to shop for other items on the same trip (38 percent) or get an immediate credit (40 percent).
  • 28 percent of shoppers surveyed said they would like to return items to convenient places like a grocery or convenience store; this number jumps to 41 percent among shoppers under the age of 30.
Transparency helps Amazon shoppers forgive difficult returns process
Amazon's return process is complex, requiring shoppers to take more steps such as contacting the retailer for return authorization. However, the e-commerce giant also provides greater transparency into the process. As a result, Amazon shoppers rate their overall satisfaction higher.
  • Shoppers who returned items to Amazon report higher satisfaction; 75 percent gave the experience a 4 or 5 on a 5 point scale, compared to 70 percent of overall survey respondents.
  • This is in spite of the fact that more shoppers reported facing hurdles with Amazon returns: 41 percent contact the retailer to get a return authorization (compared to 28 percent overall); 25 percent need to find a different box or envelope (compared to 16 percent overall).
  • But Amazon's process is more transparent: 32 percent of consumers can track their return package, versus 25 percent overall; 45 percent are informed when their refund is processed (compared to 25 percent) and 34 percent receive updates on the status of their return (compared to 15 percent).
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