Consider a question that most e-retailers ask when positioning their online post-purchase experience: Should your online orders include a pre-printed return shipping label in the box or not?
If the answer is yes, then why? Is this label-in-box method the best customer experience? What are the pros and cons?
After a year of speaking with hundreds of e-retailers, I decided it’s time to weigh in on the decisions merchants face when choosing the right path for their business. Keep in mind that U.S. e-commerce sales reached $452 billion in 2017. With up to 30% of all products ordered online returned, that leaves a lot of money on the table. If any of this money is going to make it back to your store, it’s worth taking a second look at what happens after the shopper clicks "Buy".
Let's dive in.
The Pro(s) of Label-in-Box
I liken the label-in-box to the Tinder of return policies. Swiping a screen or slapping a pre-paid sticker on a package are catering to the lowest common denominator of decision making. A simple and convenient action to say yes or no. This human is not my type, swipe left. This shirt didn’t work out, slap on the label. Boom. Done. The convenience factor is key to this formula.
Creating a convenient return policy is, according to Forbes, “the only way for a retailer or brand owner to have a sustainable business." Think about the Amazon one-click ordering, which sparked an eight-year patent battle costing millions of dollars all because of the huge impact that convenience has on consumer behavior.
You might be wondering what a convenient return policy looks like? Usually something like this...
- Not having to read a wall of text that is all too often a return policy page
- Not having to contact Customer Service
- Not having to wait for a refund
Okay, I know that was a short Pros list but convenience really is king when it comes to the benefits of offering label-in-box.
Now let's take a look at the other side of the coin.
The Cons of Label-in-Box
Higher Return Rates
The first pitfall of having a label-in-box return policy is the increase in returns. By including a pre-printed label-in-box, it becomes easier for shoppers to return. They can return otherwise non-returnable items that are outside the eligibility window, worn, torn, or missing a label.
The other reason that label-in-box boosts return rates is the psychological hangup that can occur post-purchase. Otherwise known as buyers remorse.
Maybe you love the product but spent a little too much money on that given week. Before you know it, the doubt sets in, and there’s the return label, ready-to-go and already in-hand.
Missed Customer Touchpoint
Missing an opportunity to re-engage with customers and bring eyeballs back to your website is a big sacrifice when using the label-in-box method. Sending email updates on the whereabouts of a return or refund can also help put shoppers at ease and lower customer support inbounds.
Loss of Returns Insights
Retailers who use the label-in-box method also sacrifice a reliable way to collect feedback and draw product insights.
Some stores include a slip with each order and encourage shoppers to share feedback or their “reason for return" before sending the product back. Since shoppers do not have any incentive to fill out the form they often leave it blank.
If they do fill out the form, this data has to be collected and input manually, creating a painstaking process to get necessary information.
When you leave the power to return in your shoppers' hands, you give away operational control. There is no way to predict or prepare ahead of time for how many items will be returned within a given time frame, which leaves you to make reactive decisions. This lack of visibility into your returns workflows makes it hard to manage warehouse costs and control inventory dynamics.
Hidden Support Costs
Lost your label, returning a gift? There are countless use cases and questions that arise during the returns process. Brands have to staff up Customer Support Representatives (CSR) and task them with high-touch, low-value chores like generating return shipping labels.
This results in costly CSR operations and frustrated shoppers that now have to spend their time interacting with a human to get a shipping label.
Choosing the Solution Right For You
There are a handful of startups that are tackling the pains of managing returns and exchanges. I work for one, so I’m biased to Returnly, but as you decide what works best for your brand, consider this. The only thing that matters is that you provide the same ease-of-use inherent to the label-in-box method, but in a way that captures data, reduces support costs, and re-engages customers to do what they originally wanted to do in the first place...buy your product!