Customer satisfaction

and sales through

sustainable returns
Introduction In the dynamic world of e-commerce, returns have emerged as a critical
yet often overlooked aspect of the retail ecosystem. Far from being a
mere afterthought, a well-crafted returns policy can be a powerful tool
for businesses, driving cost efficiencies, boosting customer satisfaction
and, ultimately, propelling sales growth.

As consumer consciousness shifts towards sustainability, shoppers

are increasingly scrutinising retailers’ practices, viewing returns
management as a litmus test for corporate responsibility. This evolving
landscape presents both challenges and opportunities for retailers, who
must navigate the delicate balance between customer-centric policies
and safeguards against fraudulent activities.

Recognising the pivotal role of returns in shaping the future, Loop

and Inside Retail embarked on a comprehensive study. The research,
drawing insights from a statistically significant sample of 750 Australian
online shoppers, provides a nuanced understanding of consumer
expectations and behaviours in the returns space.

This report delves into the findings of this groundbreaking survey,

offering retailers a treasure trove of actionable strategies. By leveraging
these insights, businesses can craft returns policies that not only meet
the evolving demands of eco-conscious consumers, but also drive
positive outcomes for their bottom line. As we unpack the data, retailers
will find a roadmap to transform their returns process from a necessary
evil into a competitive advantage in the cutthroat world of online retail.

Customer satisfaction and sales through sustainable returns 2

Foreword Leading up to peak season, identifying new ways to delight
shoppers and crafting a strong retention strategy is absolutely
crucial. As brands invest heavily into customer acquisition
Increased loyalty, higher order values, and word-of-mouth
recommendations are just a few of the benefits you’ll see by
implementing more sustainable practices throughout the post-
with sales events and promotions, the ones who win loyal purchase experience. Today, Loop works with brands around
shoppers are those who extend that focus to the post-purchase the globe such as Allbirds, Patagonia, FIGS, and Brooklinen to
experience. implement creative solutions to improve sustainability in the
returns process.
Just one of the ways to level up your peak season strategy is
through sustainability. At Loop, we believe there’s a path to more With Loop, brands can promote sustainability by encouraging
sustainable returns–not only because it’s the right thing to do for shoppers to reuse their packaging directly within the portal,
the health of our planet, but because your customers demand it. offset their carbon footprint by purchasing credits, utilize
bulk consolidation, and dynamically route returns to donation
centers, recycling plants, or integrate with secondary resale
platforms. Lastly, brands can implement “Keep Item”, allowing
customers to keep their items that otherwise would be unable
to be resold, reducing waste and helping you save on shipping
costs.

This is just the beginning–we’re confident you’ll gain essential

insights and strategies through this report to drive your most
successful peak season yet. Happy reading!

The Loop Team

Customer satisfaction and sales through sustainable returns 3

Key findings
Tailoring returns by Optimising website The power of
demographics and delivery sustainable returns
This report explores the
Return rates: Two-thirds of online shoppers Minimising returns: Invest in user- Customer preferences:
critical role of returns in
return items; Gen Z exhibits the highest rate friendly website design and clear product • Over half (52%) of shoppers prioritise free
e-commerce, analysing
(median of 17 items a year), Baby Boomers descriptions to reduce returns due to returns.
how sustainable practices have the lowest (median of 8). inaccurate expectations (42% of returns).
can enhance customer • Sustainability is a growing concern,
satisfaction, loyalty and, Most returned items: Clothes are most Delivery issues: Address delivery-related with 55% choosing sustainable options
ultimately, sales. Key findings frequently returned (38%), followed by shoes returns (incorrect items: 35%, damaged items: and 62% expecting brands to prioritise
(20%) and, surprisingly, food and drinks (17%). 36%) by improving distribution processes. sustainability.
reveal a growing focus
on sustainability among • Sustainable returns options incentivise
Australian online shoppers, purchases (52%), repeat business (48%),
and recommendations (54%).
with over half prioritising
sustainable options across Sustainable returns strategies Addressing returns abuse
their purchases.
Top options Generational differences: Gen Z shoppers
By implementing sustainable
• Reusing delivery packaging (38%).
are twice as likely to engage in returns abuse.
Optimising the returns process
returns practices and tailoring International trends: The trend of charging a
• Convenient return drop-off locations (28%).
them to evolving customer return fee may also develop in Australia. Preferred returns methods
expectations, retailers • Pre-printed return labels (21%).
• Encouraging product donation (18%). Minimising abuse • In-store returns are favoured (43%),
can enhance customer creating upsell opportunities.
satisfaction, loyalty and brand • Encouraging exchanges over refunds (17%). • Implement software to identify high-risk
shoppers. • Convenience drives mail returns (29%).
image. This translates into a
competitive advantage. • Trial different policy settings (e.g., order • Offering free and simple returns is crucial
limits and returns window adjustments). (lack of free and simple returns deters 43%
and 34% of shoppers, respectively).
• Educate customers about the negative
consequences of returns abuse.

Customer satisfaction and sales through sustainable returns 4

 The who and what of returns
Our research identified that around two in Among Gen Z, more than half (53%) had purchased to do. User-friendly design and
three (63%) online shoppers have returned returned one or more items in the last year. customer experience (CX) testing are the most
items. The number of items they return Gen Z were not the only demographic with effective ways to minimise these issues.
each year varies among generations, from a relatively high rates of returns, however, with
median of 17 among Gen Z down to a median women (45%), people with children under As a bonus, not only can optimising website
of only eight for Baby Boomers. This finding 10 (48%), and people who shopped online product representation reduce returns, but
has important implications for retailers that 5+ times per month (47%) all high. And the also it typically increases basket value and
are focused on particular generations, as it segment with the highest rate of returns were general customer satisfaction.
provides a baseline against which to evaluate households with an income over $150,000 a
the returns behaviour of their own customer year (50%), though they may be able to afford The retailer may outsource its distribution,
base. more items. but shoppers still blame the retailer for
any issues around delivery. The two most
In all of these categories, the rate of returns The biggest reason for returns was the item common delivery-related reasons for returns
was a least twice as high among Gen Z as being faulty (43%). Still, there are many areas are because the incorrect item was delivered
for Baby Boomers. While, on average, Gen Z under retailers’ direct or indirect control where (35%) or the item was damaged in transit
does shop online more frequently than Baby they can usually make improvements. (36%).
Boomers, our statistical analysis of the data
identified age, and not frequency of shopping, Retailers seeking to reduce returns should And while over half (54%) of online shoppers
as the most important factor in understanding start by looking at their website, as 42% of say they have decreased the number of times
this behaviour. returns result from the purchased item not they return items, it is still so important that
looking as it did on the retailer’s website and 61% will avoid retailers that don’t offer free
34% are because it didn’t do what it was returns.

TAKEOUTS Tailor returns policies

by age group
Improve online product
representation
Evaluate the strategic implications
of offering free returns

Customer satisfaction and sales through sustainable returns 5

Why shoppers care about sustainable returns
Australian consumers are dealing with dramatic The power of sustainable returns options
increases in the cost of living, and these are flowing
through to their shopping behaviour. Compared with
It is clear that sustainability and returns both affect Sustainable returns options typically cost more to
a year ago, 85% are thinking more carefully before
shoppers’ choice of retailer, and the intersection of operate; however, the increase in repeat patronage
buying things, and 69% are now more likely to try to
these two criteria makes a direct impact on retailers’ arising from offering sustainable returns will help offset
save money by doing their shopping at sales events
bottom line. these costs. Research has previously identified that
and in the sales periods leading up to Christmas.
for many retailers, 44% of revenue is generated from
repeat shoppers.
At the same time, concerns about sustainability are
becoming more prevalent. One in two shoppers Offering sustainable returns options will In addition, the increase in brand recommendations that
say that, compared with a year ago, they are encourage about half of shoppers to choose is associated with offering sustainable returns helps
choosing more sustainable options in all parts of
their lives (55%) and are more concerned about the
a particular retailer (52%), to return to build brand recognition and positioning.
environmental impact of their shopping (50%). that retailer for further purchases (48%),
Retailers may also consider offsetting any additional
More than three in five (62%) have also increased and to recommend the retailer to others cost of offering sustainable options via a customer
their expectation that brands will prioritise (54%). These statistics highlight the power subscription arrangement. There is strong interest in
sustainability. A similar proportion (60%) feel that
of offering sustainable returns options to this option, with one in five (21%) shoppers willing to
retailers don’t take sustainability seriously enough.
provide a formidable point of difference. More pay $15 for an annual subscription to use sustainable
returns options.
The rewards for brands that embrace a broad range importantly, our survey findings have identified
of eco-friendly practices are significant, as more that shoppers’ focus on sustainability is While offering sustainable returns options will enhance
than half (52%) of all shoppers are more likely to increasing year on year, and so does the sales, loyalty and recommendations, not offering them
return to them and over one-third (37%) say they
spend more money with them. competitive advantage of this strategy. will turn away one in 10 shoppers (11%).

Customer satisfaction and sales through sustainable returns 6

Why shoppers care about sustainable returns
Getting mileage from sustainable
returns practices What makes a brand more sustainable or eco-friendly:
Source: Inside Retail x Loop consumer survey 2024
Shoppers recognise a wide variety of ways in which
retailers can be more eco-friendly, and returns-related
strategies feature prominently in the top 10.
62% 42% 38% 28%
The most widely recognised returns-related practices are:
Using recycled packaging Minimising delivery Reusing delivery Convenient returns
packaging packaging when returning drop-off locations
• Reusing delivery packaging when returning (38%)
• Convenient returns drop-off locations (28%)
• Pre-printed returns labels (21%) 28% 26% 21% 20%
• Encouraging donating over returning (18%)
• Encouraging exchanges over refunds (17%). Sustainable shipping Accurate online product Pre-printed returns labels Encouraging standard
practices descriptions delivery over express
The appeal of these strategies is not target-market
specific, so retailers that leverage them can be reassured 18% 17%
of their potential impact across all their customer types. Half of the top 10 most impactful
Encouraging donations Encouraging exchanges strategies involve returns
The more of these that a retailer can embrace, the over returning over refunds
stronger their competitive advantage among the one in
two shoppers who care about sustainable returns.

Sustainability concerns are growing Sustainable returns options boost Multiple eco-friendly return
TAKEOUTS despite economic pressures customer loyalty and spending strategies have broad appeal

Customer satisfaction and sales through sustainable returns 7

Optimising returns behaviour
Making it easy
Shoppers will typically default to the easiest option. The In general, how would you prefer
survey results show that going to a retailer’s physical store
is the most preferred option for returning items (41%). to return online purchases:
Source: Inside Retail x Loop consumer survey 2024

This is likely because it offers the customer an immediate

opportunity to find an alternative to the product they
returned. Having the customer in a physical store also
offers opportunities for the retailer to make additional
sales. 41% 14%
At-home
Return to pickup
For these reasons, omnichannel retailers should actively a physical
encourage in-store returns wherever possible. store of the
retailer
Convenience and familiarity are the most likely reasons
why mail is the second most popular way to return items

8%
Return to
(29%). While returning to non-retail stores (8%) and to a secure
secure lockers (8%) both lag behind mail, their appeal will locker
increase as they become more widely available.

At-home pickup is the preferred option for one in six (14%)

shoppers. It will be interesting to see if this changes as the
proportion of time spent working from home continues to
29%
Return by mail 8%
Return to
non-retail
store
decline slowly.

Customer satisfaction and sales through sustainable returns 8

Optimising returns behaviour
Making it simple
Which of the following has stopped you from
Australian shoppers have become accustomed to free returns
purchasing at a particular retailer: and not offering them has the potential to deter over two in five
Source: Inside Retail x Loop consumer survey 2024
potential customers (43%).

Along with saving money, however, shoppers also love it when

43% Did not offer free returns
things are simple and easy; not having a simple and easy returns
process negatively affects one in three shoppers (34%). On the
34% Returns process not simple & easy
flip side, one in five shoppers (18%) will switch to a retailer that
25% Previous poor returns experience offers an easier returns process.

23% Returns process too difficult to understand These findings provide an added incentive for retailers to
address their own returns process, as it can potentially switch
18% Returns window was too short from being a service that pushes customers away to one that
attracts and retains them.
18% Other retailers had an easier returns process
Ensuring that the returns process is best in class will also
11% Did not offer a sustainable returns option
address the barrier of the process being too hard to understand,
which nearly one in four customers (23%) cite, and will also help
reduce the incidence of poor returns experiences (25%).

In-store returns are preferred, Free and simple returns processes are Test different configurations to optimise
TAKEOUTS which offers upsell opportunities still popular with Australian shoppers customer satisfaction and behaviour

Customer satisfaction and sales through sustainable returns 9

Addressing returns abuse
Returns policy abuse, fraud and other charging a return fee doesn’t negatively impact
unfavourable consumer returns-related repeat purchases among US customers.
behaviours exploit the returns process. No matter
how you slice it, these behaviours harm a brand’s Return fees are also common in other overseas Unfavourable • Ordering multiple items to try, knowing most will
be returned, also known as bracketing
bottom line. Some returns abuse is inevitable; markets. In the UK, the median fee for returning consumer return- • Attempting to return an item ineligible for return
however, there are strategies retailers can adopt an online purchase to leading retailers is £6, with
to minimise the most common forms. the average fee much higher, at £11.51.
related behaviour (e.g., final sale, past the allowed returns window)

The most important consideration for all retailers There is a strong chance similar trends will
is that the incidence of returns abuse varies develop in Australia. Retailers are advised to
dramatically among generations, with Gen Z
shoppers at least twice as likely as the average
monitor the market closely.
Abuse Fraud
customer to engage in it. As in the case of returns windows, the trialling • Wearing/using an item with the • Returning an empty box or an item less
of different policy settings can also minimise intention of returning it after the expensive item than the one originally
Fees and charges can be a powerful way to returns abuse. Options include imposing a limit fact (i.e. wardrobing) purchased
influence shopper behaviour in this area. on the number of versions of a specific item that • Buying an item with the • Purchasing items with a stolen or
can be ordered at the same time (to address intention of requesting a return borrowed credit card, then attempting
While in Australia, many retailers advertise free bracketing) and requiring that a photo of an item and still keeping the product to have the refund processed to a
returns, internationally, more and more retailers damaged in transit is provided within a short time • Claiming that a functional different credit card
are charging return fees. In the US, return fees of delivery, e.g. 24 hours. Clearly communicating item is defective to receive a • Claiming an item never arrived to
have become normalised and are rising. For these requirements at checkout helps minimise discount/refund receive a second product and/or refund
example, 62% of Loop merchants in the US are both abuse attempts and dissatisfaction among
now charging return fees, a +47% increase from customers who are not attempting returns abuse.
the start of 2020. Loop data also indicates that

1. https://www.statista.com/statistics/1381534/uk-online-order-return-costs/

Customer satisfaction and sales through sustainable returns 10

Addressing returns abuse Do you at least occasionally:
Source: Inside Retail x Loop consumer survey 2024

Previous research has identified that Ethical/ • Personal integrity: Fear of compromising personal Buy multiple versions planning to return some
among online shoppers who have values and integrity.
never participated in returns policy moral guilt • Social disapproval: Concern about how they might be
42%

perceived by others if their actions were known. 22%

abuse, making shoppers aware of its
repercussions can have a positive impact. • Internal conflict: Anxiety or discomfort stemming from
knowing they did something wrong. Return an item because you needed the money
The nature of the repercussions 41%
that deter returns abuse fall into
three main categories. Fear of legal • Legal penalties: Worry about potential fines, lawsuits, 16%
or other legal actions taken against them.
consequences • Criminal record: Fear of obtaining a criminal record Buy an item for a single use or special occasion
One of the most effective ways which could impact future opportunities. and then return it
of reducing returns abuse is by • Law enforcement involvement: Anxiety about dealing
leveraging returns-management 31%
with police or legal authorities.
software to identify high-risk 15%
shoppers proactively. This software
flags those who have high return rates Impact on the • Economic impact: Concern about contributing to Return an item you broke pretending it
overall or who often return high-value financial losses for businesses, which can lead to was damaged in transit
items. Retailers can then enact returns business/ higher prices for all consumers.
34%
abuse determent strategies for these retail industry • Job security: Fear that widespread return policy abuse
specific shoppers, including not could lead to job losses within the retail sector. 14%
offering returns at all, charging fees or • Service quality: Worry that abuse could lead to stricter
shortening the returns window. return policies or reduced customer service quality,
affecting the shopping experience for everyone. Gen Z Average

Returns abuse is significantly Targeted policy adjustments Educating customers about the ethical, legal, and economic
TAKEOUTS higher among Gen Z shoppers can help mitigate abuse consequences of returns abuse can deter potential abusers

Customer satisfaction and sales through sustainable returns 11

 PARTNERING
WITH LOOP
Loop recognises the complexities of navigating

CLOSING THE LOOP

the returns landscape. We offer a comprehensive
suite of solutions designed to help businesses
optimise their returns processes, minimise
environmental impact, and ultimately achieve
greater customer satisfaction. By partnering with
The landscape of e-commerce is constantly evolving, and the role of returns Loop, you gain access to:
has become a critical yet often overlooked aspect of the customer experience.
• Industry-leading expertise: Our team of
By implementing sustainable returns practices and tailoring them to evolving
experts possesses deep knowledge of returns
customer expectations, retailers can unlock a wealth of benefits:
management and sustainability best practices.
• Enhanced customer satisfaction: Streamlined and eco-friendly returns • Advanced technology: We leverage cutting-
options demonstrate a commitment to environmental responsibility, edge software to streamline the returns process,
resonating with today’s sustainability-conscious consumers. This fosters identify high-risk shoppers, and implement
brand loyalty and positive word-of-mouth marketing. targeted returns policies.
• Reduced costs: Sustainable practices like reusing packaging and • Data-driven insights: Gain valuable customer
encouraging exchanges over refunds minimise environmental impact and data to understand return patterns and inform
can lead to cost savings. Additionally, addressing returns abuse through strategic decision-making.
targeted strategies further protects your bottom line.
• A competitive advantage: Offering a seamless and sustainable returns
experience differentiates your brand in a crowded marketplace. Customers Take the first step towards a more
increasingly prioritise eco-friendly options, making this a strategic
advantage for attracting and retaining customers. sustainable and customer-centric
future. Contact Loop today!

Customer satisfaction and sales through sustainable returns 12

REPORT BY