We've all been there. You order a shoe organizer for $11.99 on Amazon. But it doesn't work with your shoes, which means you're either stuck with it or you have to pay $4.99 just to ship it back. So what do you do? Pay nearly half of the product's price to return it?
One company thinks US consumers are willing to shell out a yearly fee rather than face this dilemma. Clarus Marketing, which also runs a free-shipping subscription service, launched a program called Return Saver this week. It's betting that providing free returns, typically a pricey endeavor for any online retailer, is an untapped market.
"Customers are going to buy more knowing that they're covered," Clarus CEO Tom Caporaso said. " essentially they get peace of mind."
Shipping is an expensive, but necessary, part of an Internet retailer's business. Even as transportations costs increase, consumers' expectations for free shipping continue to grow, with Amazon's Prime $99 shipping subscription program leading the way. While returns make up part of that process, online retailers have yet to make it an industry standard.
Most online shoppers factor how easy or hard it is to make a return when they are deciding if they should buy a product, according to comScore, which found that four out of five shoppers take that into consideration. Returns typically cost consumers between $4 and $8 each time, Caporaso said. His company checked the return polices of the top 100 Internet retailers (of which Amazon is at the top of the list) and found 62 percent require still customers to pay for returns. Caporaso said that's where Return Saver comes in.
The subscription costs $49 a year for FedEx Ground service and is limited to items that can fit in a standard-size box with a weight of 50 pounds or less. The service applies to any online store. The process is similar to any online store's return process: just print out a label, affix it to the box and drop it off at a FedEx pickup location.
Clarus has been in the shipping subscription business since 2001, running a service called FreeShipping.com long before Amazon established Prime in 2005. FreeShipping.com is not as freewheeling as Return Saver since it doesn't cover all retailers. The program provides free shipping for about 1,700 partner retailers, including Target, BestBuy, Walmart and Apple.
Return Shipper is not without competition. ShopRunner, a competitor that does both free shipping and returns for $79 a year, covers over 100 brands within its subscription service.
And although Amazon doesn't have a free return policy, it's aware a good return experience is part of its highly publicized customer-first mantra.The company will often send out a replacement product without requiring customers to ship back the defective product.
Caporaso argues that Amazon's dominance is exactly why other retailers should promote a service like Return Saver -- it encourages customers to shop at more online stores other than the e-commerce giant. Most shoppers become repeat customers if they have a positive experience with a return, he said.
"We talk to retailers all of the time. Amazon is probably one of the first things they think about in the morning and one of the last things they think about before they go to bed," Caporaso said.