This Christmas, Retailers Are Tightening Up Their Return Policies—But Is That a Good Idea?

It's been a trust signal since the earliest days of ecommerce: easy return policies.

Why is this a trust signal? Because, just like money-back guarantees and other vendor commitments, it shows that the seller is putting the buyer's best interests first—not just in words but in actions.

In fact, a Spanish study of ecommerce buyers showed that such assurances were even more persuasive than first-party customer reviews in buying decisions.

Despite this, there's been a lot of news coverage this holiday season on retailers that have decided to tighten up their return policies—charging restocking fees and shortening the window in which returns are permitted, among other restrictions. The rationale for these changes is that inflation has squeezed margins and that retailers have to find ways to make up for this.

Phelps United, an ecommerce brand accelerator, recently released a survey on the topic of returns suggesting that such restrictive policies might be short-sighted. My agency, Idea Grove, worked with Phelps United on the poll using the Pollfish survey platform. You can review all the findings by reading the Phelps United 2022 Holiday Gift Returns Survey report.

Adam Shaffer, president of Phelps United, provided this analysis based on the prevalence of returns and consumers' expectations of flexibility in returns, as expressed in the survey results:

“Americans expect to return gifts they receive via online retailers today. It’s become such an intrinsic part of the holiday shopping experience that when retailers decide to tighten their policies, they risk leaving a negative impression—a bad aftertaste that may impact long-term brand perceptions. That’s why we recommend flexible return policies for online merchants.”

Adam and I discussed the survey, and the pros and cons of flexible return policies, in a recent LinkedIn Live broadcast, which you can view below.