There’s a return practice that’s been quietly simmering in the retail world for years. It’s called “refund without return” or “keep the item.” As the name would suggest, it means that a retailer provides a refund to a customer who asks to return an item, but lets the customer keep or dispose of the item instead of sending it back. A whopping 75% of customers say they have been offered a “keep the item” return at least once in their shopping lifetime, and most frequently cite Amazon, Walmart, Target, Wayfair, Chewy, Kohl’s, and Shein as common benefactors.
At first blush, it seems like a customer satisfaction winner because people generally like free stuff. But, surprisingly, we found that sentiment is mixed—a customer’s reaction to a “keep the item” return can vary according to personal experiences and their previous relationship with that retailer.
Returns can be challenging for retailers. Seasonal merchandise has to reach the retailer quickly, and arrive in resalable condition. A company must have staff on hand to process the return. For returns that are shipped back, there’s the added cost and environmental impact of getting a package back to the retailer.
That means retailers who offer free returns could actually lose more money on the transaction or have a greater environmental impact by accepting the merchandise than by letting the customer keep it.
There’s also the matter of timeliness. While some brands offer instant refunds for returns, those that wait to receive merchandise before issuing a refund risk alienating the customer with a lengthy return process.
Mishandling a return is one of the fastest ways to lose a lifetime customer, so retailers—regardless of their “keep the item” stance—need to communicate clearly and proceed thoughtfully.
If return shipping and processing will cost the retailer more than the value of the returned item, it’s reasonable for the retailer to default to a “keep the item” policy. With shipping fees alone starting at $5-7 and labor not only being expensive but currently in short supply, that mark may be higher than you’d think for some brands. Also, it’s simply wasteful to ship back a damaged or otherwise unsellable item (beauty and healthcare often fall into this bucket), only to have it destroyed or tossed.
The results of our recent study support that theory, with 59% of “keep the item” returns in the under-$20 range, and 23% in the $21-$50 range. Notably, nearly 20% of “keep the item” returns were for purchases over $50 or even over $100.
Our research found shoppers have mixed feelings about “keep the item” policies, but the 25% of respondents who had never experienced the practice were more skeptical than repeat customers who were familiar with the practice. 90% of customers who received the perk had previously shopped with that retailer, and appreciated the trust expressed through this policy.
Shoppers value their own time and they want retailers to value it, too. The most favorable response to “keep the item” returns found that 65% of shoppers appreciate that retailers are saving the shoppers’ time and effort by letting them keep the return. On the flip side, 13% of all shoppers felt retailers were passing the problem of disposing of unwanted merchandise onto the shopper.
Our research suggests this perk may yield better results when reserved for repeat customers and VIPs, fostering a mutual feeling of trust and higher likelihood of advocacy.
The majority of shoppers (53%) express concerns that unethical customers will abuse a “keep the item” policy, and drive up prices for everyone. That number surges to 60% among shoppers who had never been offered a “keep the item” return. Interestingly, however, only 5% of survey respondents in either category said they would be likely to abuse that policy themselves.
While there are certainly environmental arguments to be made for letting customers “keep the item,” there’s an opportunity to message this more prominently with customers. Only 50% of all shoppers said they liked that retailers were saving costs and the environment through “keep the item” refunds.
A blanket “keep the item” policy may not work to a retailer’s advantage. Our study suggests that perk may yield better results when reserved for repeat customers and VIPs, fostering a mutual feeling of trust and higher likelihood of advocacy.
Among repeat customers who receive a “keep the item” offer, 87% say they are likely to shop with the retailer again, while 40% are likely to recommend the retailer to others based on the policy. Among first-time customers in the same scenario, only 71% say they would shop again with the retailer, while 35% say they would recommend the brand to others.
Retailers that incorporate “keep the item” practices should prioritize ways to communicate the reasoning behind the policy, along with low-touch strategies that customers can use to dispose of the merchandise if they don’t want to keep it.
Whichever policy a retailer chooses for that particular transaction—whether it’s to ask the customer to keep the merchandise or send it back—retailers must remember that the return experience can make or break the relationship. In fact, 96% of customers who are satisfied with a retailer’s return process said they would shop with that retailer again. The most important objectives are to create a seamless and flexible return process, empower customers to help themselves, and build loyalty with proactive return communications.
Retailers that incorporate “keep the item” practices should prioritize ways to communicate the reasoning behind the policy, along with low-touch strategies that customers can use to dispose of the merchandise if they don’t want to keep it. For example, a company could send an email confirmation of the refund, along with an explanation of the costs or environmental impact of returns, and suggestions for easy ways to donate or share the item, like re-gifting or posting in a local buy-nothing group. Chewy does this well—instead of asking to have heavy bags of pet food shipped back to them, they suggest that it gets donated to a local animal shelter which generates goodwill among their customers.
Every business decision creates an opportunity to communicate and foster connection between a retailer and the customer. Brands cannot assume that they’ll win lifelong customers simply by issuing a refund and letting them keep the item. How that decision is communicated is key to the customer’s perception of and relationship with the retailer.
Catherine is VP of Marketing at Narvar. Prior to joining, she worked for a number of AdTech & MarTech companies including Zeta Global and IgnitionOne, transforming marketing teams into growth catalysts.