Assessing the risks — and rewards — of ‘keep it’ returns
When a shopper needs to return a big, bulky item, like a 10-pound bag of cat litter, both the shopper and the retailer are inconvenienced. There are two apparent options:
- Ship the bag back, forcing the shopper to bring the item to a mailing center while the retailer incurs shipping and handling costs.
- Return the bag in-store, creating a hassle for the shopper, and potentially causing storage challenges for the retailer.
In lieu of these two less-than-ideal options, some retailers are considering a third option: a “keep it” policy. This option allows the shopper to keep the item but still receive a full refund. This scenario fosters customer loyalty by saving the shopper time, while also protecting the retailer from the costs and difficulties associated with managing the return.
However, the “keep it” returns policy should be used sparingly as bad actors may take advantage.
“Keep It” Return Policies Growing — Here’s Why
According to the 2023 Consumer Returns in the Retail Industry report conducted by Appriss Retail and NRF, 14.3% of revenue from a retailer’s sales last year was lost to returns. This includes the cost of the merchandise returned and expenses like labor, shipping, transportation, and packaging associated with the return.
These additional costs often outweigh the benefits of returned merchandise when it comes to certain items, such as:
- Bulky and unwieldy items like furniture or appliances – These items are challenging and costly to package, ship, and restock.
- Low-value products like small toys or makeup – When the product’s price is lower than the cost of shipping it back, the returns process becomes wasteful.
- Perishable goods like food or hygiene products – Once these items are returned, they cannot legally be resold due to health and safety regulations.
As a result of these product-specific challenges, the popularity of “keep it” returns is growing. In 2023, 59% of retailers offered a similar policy on account of the benefits the policy can provide.
Benefits of “Keep It” Returns
In many scenarios, “keep it” returns offer a better experience for both retailers and their shoppers. Retailers avoid losing additional costs associated with a return while shoppers enjoy the refund without the inconvenience of returning an item.
By fostering a convenient experience, retailers can earn more customer loyalty. Shoppers who have a positive returns experience are more likely to make a repeat purchase and build a long- standing connection with the retailer. These benefits prove a clear case for “keep it” returns, but unfortunately, without the right strategies in place, the policy can also be risky.
The Risks of “Keep It” Returns — and How Retailers Can Mitigate Them
The increase in returns has also generated a spike in returns fraud. With “keep it” returns, bad actors might see the policy as an opportunity to take advantage of the retailer. Fortunately, retailers can rely on technology to identify returns fraud in the moment and in some cases,
predict and mitigate fraud before it happens.
For example, retailers can implement statistical models to determine when to approve the “keep it” policy. If a shopper has a history of buying high-value products and rarely returning them, the model will likely recommend the “keep it” policy for the shopper, while someone who frequently
returns at least one item from every shopping basket might have the opposite model recommendation.
With AI-driven tools, retailers can consistently monitor shopper behavior and tailor personalized returns policies that optimize positive interactions while safeguarding profits.
“Keep It” Returns Keep the Stress Away
In the face of costly returns, a “keep it” returns policy can benefit retailers and shoppers alike, but it also poses risks. With the right technology in place, retailers can bolster customer experiences while preventing fraud.
Fin Bauer is director of data science and growth at Appriss Retail, a leading provider of data and analytics solutions designed to reduce retail losses.
