Should you offer free returns when selling online?

Offering free returns isn’t just about generosity. Instead, it's about building trust, boosting conversions, and creating a shopping experience that makes customers feel confident to buy. Here’s why it works:

Benefits of free returns

1. Build trust: Free returns reduce the perceived risk of buying something online. This means shoppers are more likely to take a chance on something that they can easily send back.

2. Higher average order values: Shoppers feel comfortable buying more items when they know they can return items hassle-free.

3. Build loyalty: Make returns easy and customers will remember. That can mean they’ll choose your brand over others in the future.

4. Competitive advantage: If your competition doesn’t offer free returns, you have a surefire way to stand out. 

5. Reduced cart abandonment: Free returns can ease that hesitation, reducing cart abandonment and driving conversions by removing the "what if it doesn't work out" anxiety.

6. More customer data: You can analyse why customers return products to optimise how and what you sell. 

“At Sendcloud, we’ve found that offering free returns can increase conversion rates by up to 30%,” Ibrahim says. “Which shows that customers are more likely to buy when there’s no cost for returns. This is especially important in markets like Germany and the UK, where consumers expect a seamless return experience. Free returns also foster loyalty – 60% of customers are more likely to shop again if the return process is smooth.”

Drawbacks of free returns

Offering free returns may seem like a customer-centric move, but it also comes with some potential drawbacks. 

1. Less profit: From shipping to processing, returns can eat into your bottom line.

2. Operational stress: Warehousing, restocking, and quality checks cost you time and can strain your resources. 

3. Encourage overbuying: Customers may buy more than they need when they can return items for free. That can lead to higher return rates and inflated sales figures for your business. 

4. Higher fraud risk: Free returns open the door for abuse, like wardrobing or returning used products, which further depletes revenue.

5. Cash flow complexity: Trying to manage your cash flow when dealing with a high return rate is almost impossible.

6. Product devaluation: If you can’t resell returned products at full price, then you’re likely leaking revenue and profits. 

“Managing free returns can be costly, with return rates reaching up to 25% in some sectors,” Ibrahim adds. “Logistics, processing, and restocking can all eat into profit margins. Interestingly, we’re now seeing that large retailers are normalising paid returns, especially in fashion. And consumers are gradually getting used to it. The key is for businesses to develop a return strategy that aligns with their brand values – such as incorporating return solutions and adding sustainability into their return policies.”