Want Fewer Returns? Try a Longer Return Window

The holidays are over (thankfully), and your ecommerce business is back to normal. Or, almost.

It’s now returns season, and that can be almost as difficult for B2C businesses as the holidays themselves. Customers are trying to return gifts that are the wrong size, broken, unwanted, or otherwise flawed in some way.

It’s tough for your customer service team to sort through it all and still make sure you end up with happy customers at the end of the day.

Because of this flurry of returns, it’s tempting to minimize the window your brand allows for returns. You may think that if you only let buyers return items after 2 weeks, you’ll have to deal with less volume and fewer returns overall.

Actually, the opposite is true. Long return windows can be a huge boon for ecommerce brands. Allowing buyers to return items for a month or more can counterintuitively decrease the number of returns you see overall. How exactly? It all comes down to the Endowment Effect.

The Endowment Effect

The secret to the effectiveness of long return windows is in the “Endowment Effect.” This is an idea based on psychology and behavioral economics and shows people often ascribe more value to things simply because they own them. Also known as loss aversion, this concept shows it’s a lot harder to get people to let go of an item if they feel ownership of it.

There have been a number of social experiments that illustrate this, including one where participants refused to exchange a (possibly worthless) lottery ticket for cash. This economic rule has been shown to be true in everything from massive real estate transactions to buying used furniture on Craigslist. Often, it leads to people refusing to sell an item they own for a reasonable price and can be leveraged to better negotiate.

How returns impact ownership

So what does the Endowment Effect have to do with returning gifts? Strangely enough, if a person keeps an item in their home for a few weeks after they received it, they begin to feel as though they own it. If a buyer keeps an item long enough, it increases the endowment effect significantly. Your customer will feel like the item is now theirs, even if they don’t really want it. Eventually, they will decide the item isn’t so bad after all and they’d rather keep it than trek to the post office and return it.

If you have a very short return window, your buyers don’t have enough time to feel ownership of your product. Instead, they’ll return your product quickly in order to get a full refund or exchange in time. This means that a long return window is actually a great tactic for retailers looking to decrease the overall volume of returns. If your buyers feel like they have all the time in the world to return an item, they’re more likely to put it off and — eventually — keep it.

Lengthen your return window

It may sound a little scary, but you should really change your return policy and make the window for returns a few weeks longer. With more time on their side, your customers will begin to feel the Endowment Effect and may be less likely to return the items they received. Even better, they will also think that your brand is kind, thoughtful, and flexible when it comes to returns.

The Endowment Effect also doesn’t just apply to holiday returns — it can improve your overall return rate throughout the year. That means fewer refunds, more revenue, and less time wasted by your customer success team. It’s the definition of a win-win. It may seem illogical, but sometimes that’s just how people are. Give your buyers more time to return items and you’ll see far fewer returns.

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