Product returns are booming. According to the National Retail Foundation, in 2020, consumers returned approximately $430 billion in merchandise to retailers — about 11% of total U.S. retail sales. Returns of online purchases are particularly high at 30% on average, having doubled since 2019 because of the increase in online shopping during the Covid-19 pandemic.
Why You Should Allow Returns on Customized Products
They may be harder to resell, but customers are less likely to return them anyway.
March 09, 2022
HBR Staff/Jay's photo/Getty Images
Summary.
Consumers are accustomed to generous product returns policies online. Firms recognize that it makes the purchase decision easier. But most companies restrict these policies to standard products and customized products are typically not returnable. In this article the authors argue that this is a mistake. Extending easy returns to customized products will encourage consumers to engage more with the brand and will also reduce the likelihood of returns occurring in the first place. This will result in more loyal customers and higher profits. The authors also explored the conditions under which companies can expect a win-win outcome from adopting a lenient returns policy for customized products. Four factors seem to be critical: making customized products more salvageable; adopting tech innovations that reduce the cost of customization; reducing or eliminating customization fees; and providing improved, user-friendly interfaces.