A new consumer dynamic is emerging in retail: Purchase risk is receding across categories, and it’s creating a new step in the path to purchase that is shifting when the consumer decision journey ends.
In an effort to be accommodating, retailers have created a new dynamic — especially with Millennials. Nordstrom, Zappos, Target and Costco are among the many that have made returning merchandise incredibly easy and generally free, prompting a relatively new and widespread sentiment among customers that virtually anything is returnable.
Thanks to these new return policies and “risk free” customer mindset, the National Retail Federation estimates merchandise returns cost retailers $270 billion annually. An NRF report (2013) says that if merchandise returns were a company, it would rank No. 3 on the Fortune 500.
So how do easy returns affect the purchase journey? In a recent study we conducted of four retail categories (grocery, technology, fashion and home décor) we saw a new step emerge: The post-purchase “I’ll keep it” phase. This is the moment when customers decide to snip off the tags and own the merchandise. Only then, even though they have already purchased your product, do they leave the “consideration” phase where they continue to look for additional options and make their final decision.
So should retailers go back to limiting returns and making it more difficult? Of course not: A recent Washington and Lee study found that online retailers who offer free return shipping see up to a 350% lift in sales while those who don’t watch YOY sales decline 74% to 100%. Returns are here to stay, and risk has most likely permanently receded.
In the midst of all of this, there is a huge opportunity for retailers and marketers. Recognize and benefit from the new “I’ll keep it” phase of the customer journey, understanding it’s an additional opportunity to succeed with them. Ask yourself, what can we be doing post-purchase to engage customers and increase the likelihood that they will “keep it” or buy from you again? Think about how your marketing should shift now that “buying it” isn’t the end goal, and “keeping it” becomes the ultimate outcome.