As eCommerce competition intensifies, brands are shifting toward more customer-friendly return policies to enhance the shopping experience, increase sales, and boost loyalty.

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84% of consumers say they check a brand’s return policy before making a purchase, and 53% report avoiding a purchase if a policy is unfavorable (ZigZag). For customers, flexible return policies reduce the perceived risk of purchasing online, leading to higher conversion rates. For brands, clear and transparent policies can help foster long-term customer relationships and deliver positive customer experiences.

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However, brands must strike a balance between leniency and profitability. While 60-day+ return windows can boost customer trust, they also increase the likelihood of returns due to post-purchase regret. Research from Shopify shows that nearly 50% of returns happen within the first week of delivery, so extending policies too long may not significantly impact return rates while increasing operational costs. This is already typically taken into consideration during the holiday season where many retailers extend their return windows to allow for holiday season returns that may have been received as gifts.

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The Rise of Hybrid Return Options

Consumers now expect multiple return methods, including in-store drop-offs, third-party return kiosks, and doorstep pickups. Brands offering multiple return channels see up to a 30% improvement in customer retention (Loop Returns, 2023). Additionally, 58% of shoppers prefer returning online purchases to physical stores, which can drive additional sales and reduce return shipping costs (Retail Dive, 2023).

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At ReturnBear, we’ve seen some of our brands save up to 60% on return costs and a near 85% adoption of package-free label-free drop offs at return points across Canada. In a survey of shoppers who have completed a return both at a ReturnBear return point and via mail-in, 78% of respondents said they prefer the convenience of dropping off their return at a return point. Brands can also get the benefit of being able to have their returns verified at a return point, before triggering an instant refund.

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Restocking Fees & Return Shipping Costs: The Fine Balance

Free shipping and free return shipping can be enticing for shoppers, even encouraging them to purchase more in a single order to meet a threshold spend that unlocks free shipping. Digitalcommerce360 found that nearly 56% of shoppers look for free returns as a source of peace of mind when shopping and being able to make risk-free purchases. Especially for brands tapping into new markets and new customer groups, having free returns can be a strong tactic to encourage new purchases.

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Yet, while free returns remain a major draw for consumers, some brands are starting to implement restocking fees or return shipping charges to reduce unnecessary returns. 42% of retailers now charge for returns, particularly in fashion, where "bracketing" (buying multiple sizes and returning the rest) is common (Digital Commerce 360, 2023). At the same time, consumers are 62% less likely to purchase again if they perceive return costs as excessive (Narvar, 2023), highlighting the importance of transparent communication in policy changes.

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Exchanges Over Refunds: Encouraging Retained Revenue

To mitigate the financial impact of returns, brands are incentivizing exchanges and store credit over cash refunds. 41% of customers are willing to opt for store credit when offered incentives like discounts or bonus rewards (Loop Returns, 2023). This approach retains revenue within the business and strengthens brand loyalty while reducing refund-related losses.

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At ReturnBear, brands typically see over 42% of returns getting exchanged or turned into store credit for future purchases. Having this as an option for customers supports revenue retention.

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Key Tactics for an Effective & Flexible Return Policy

A well-crafted return policy can enhance customer trust while minimizing return-related costs. Here are five best practices for brands looking to refine their return policies:

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✅ Offer tiered return windows: Example—full refunds within 30 days, exchanges/store credit up to 60 days.

✅ Provide multiple return methods: In-store, drop-off locations, home pickups, and mail-in options.

✅ Encourage exchanges over refunds: Offer incentives like extra discounts or free shipping on exchanges.

✅ Be transparent about restocking/shipping fees: Clearly state any charges upfront to avoid surprises.

✅ Leverage AI for return prevention: Use AI to analyze return reasons and optimize product descriptions/sizing.

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Flexible Returns as a Competitive Advantage

Brands that prioritize flexibility and customer convenience in their return policies are more likely to reduce cart abandonment, drive repeat purchases, and improve brand perception. With 74% of shoppers saying a poor return experience can deter them from buying again (Forbes, 2023), ensuring a seamless and transparent return process is key to long-term eCommerce success.

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Ready to update your return policy, or are you interested in learning more about best practices? Check out our latest report 5 Ways to Improve Your Return Policy and Keep Customers Coming Back