The truth about free and easy returns

Heather McIlvaine

14th Jun 2017

Ebay Australia last week announced a major partnership with local delivery startup ParcelPoint to improve the domestic return process and give customers a more consistent experience.

Going forward, Ebay customers will be able to select the ParcelPoint return option online, print out a pre-filled label and either drop off their parcel at one of the company’s more than 1,300 pick-up and drop-off locations across Australia, or choose to have a courier pick it up from their door.

ParcelPoint’s pick-up and drop-off locations (which customers can also select for delivery) include pharmacies, convenience stores and newsagencies, almost all of which are open seven days a week and outside of normal business hours. Its rates for a standard 500g parcel are said to be the lowest in the market.

Ebay Australia has spruiked the partnership as a global first for the company and a new benchmark for marketplaces Down Under.

“As a marketplace, we had a lot of different [return] experiences on the site. Customers may have had to send a few messages back and forth [with merchants]. It was a very manual process. What we’ve done is automate that process and make it super simple for the consumer,” Ebay Australia’s chief marketing officer Tim MacKinnon told Internet Retailing.

MacKinnon said he expects other marketplaces to follow Ebay’s lead, as easy and free returns become standard practice in e-commerce. But this may be easier said than done. 

“The execution of last mile and more importantly, reverse last mile [returns], has been one of the biggest sticking points of a strong customer experience online over last couple of years,” said Trent Duvall, KPMG’s national leader, consumer markets.

Returns are the new last mile

While a growing number of last-mile delivery startups exist to bring items to the customer’s doorstep – such as UberRUSH – fewer options are available when customers want to return those items to the retailer.

At the same time, Duvall says returns are becoming more common, as consumers tend to over-buy online – especially clothing – try on items at home and send back what doesn’t fit.

In a case of chicken-or-the-egg, easy and free returns are actually contributing this trend. But MacKinnon argues that improving the customer experience with an easy return process still makes good business sense. 

“I’m not shying away from the fact that returns involve a cost for retailers, but the increase in conversions they get from giving customers peace of mind [makes up for it].”

MacKinnon cited internal data that shows Ebay sellers on average saw a 47 per cent increase in conversions when they offered 60-day, free returns during Q4 2016.

“It’s a hassle to make a return. Even if we make it simple, it involves some work. What we don’t want is for people to think, ‘What if I buy this and it doesn’t fit?’ And then not buy,” he said.

“Knowing they can make a return makes them more comfortable buying.”

The end of 30-day returns

According to Duvall, retailers are revisiting their return policies in an effort to give customers that peace of mind.

“Most retailers are increasingly flexible around the return window. As long as there’s no evidence of wear, I would expect most retailer to honour a return after 30 days,” he said.

“It may involve a store credit, rather than a refund, but if you’re hard and fast on the 30 days, the customer may never go back to the store.”

While the vast majority of Ebay sellers currently offer a 30-day return window, MacKinnon said he is hoping to persuade sellers to extend that.

“We’re funding free returns [through ParcelPoint] for fashion sellers for the month of June. That’s millions of items. We hope to prove to our sellers that free and easy returns and extended return windows just make good business sense.”

ParcelPoint is banking on that message sinking in. The delivery service aims to grow its network of pick-up and drop-off locations to 2,000 in 2018 and ultimately reach 4,000 locations.

“That will make us equivalent to [Australia Post],” ParcelPoint CEO Julian Leach said.

Leach said the company is also expanding the diversity of its locations – it recently activated several Caltex sites – and the product category it supports.

“We’re looking at bulkier products right now. We have national deals in place with some self-storage companies that have great locations and plenty of space. We see a huge opportunity to expand in bulky goods,” he said.

A version of this story first appeared in Inside Retail Weekly, issue 2144. To subscribe, click here.