Part And Accessory Retailers Should Always Charge For Returns
Every once in a while, a parts or accessories ecommerce company will toy with the idea of offering free returns. The story goes something like this:
- Amazon.com is the largest ecommerce company in the USA
- Amazon.com offers free returns
- If we want our parts and accessories store to be big like Amazon, we have to offer free returns
Of course, free returns aren’t. Free returns don’t work for the parts and accessories industry, as consumers tend to abuse the policy. And most parts and accessories retailers do not offer free returns, charging either for shipping or restocking (or both).
The good news is that – finally – the rest of the ecommerce industry is starting to come around to our way of thinking.
Online Returns Are Getting Out Of Control
A recent story from Axios, “Free returns disappearing from retailers,” shares some interesting statistics:
- 16.5% of all online purchases are returned
- 63% of consumers order multiple sizes or colors of the same item, with a plan to return the items they don’t want
- The number of consumers returning online purchases has increased 40% since 2020
These numbers are staggering – more than 1 out of every 7 online orders is now being returned. While the parts and accessories industry doesn’t see this same level of returns (we estimate it’s ~3% for our industry), consumers seem like they are very much at ease with returning items bought online. Therefore, any retailer who offers a free return policy should expect a lot of returns.
<<Additional Reading: Selling Parts On Amazon, eBay, And Other Marketplaces>>
Etailers Are Starting To Realize Free Returns Aren’t Sustainable
The same Axios article mentions that 40% of online retailers are charging for returns, which is supposedly the highest percentage seen since the early days of ecommerce. The gradual end of free return policies is likely a shock to some consumers (hence the news story).
However, when it comes to the parts and accessories industry, free returns haven’t been a thing for a while now:
- Most of the largest online parts retailers (CarParts.com, Advanceautoparts.com, CarID, TireRack, RockAuto) charge either shipping fees, a restocking fee, or both
- eBay and Walmart.com both allow retailers to charge a restocking fee, and/or charge for return shipping
In the parts industry, a free return policy would encourage customers to buy parts they might not actually need. It would also encourage customers to buy multiple part numbers to make sure they have the right fitment.
After all, it’s better to have the parts you might need for that upcoming repair than it is to stop and run to the parts store, right? But this is a killer for part retailers, and for these reasons (plus relatively low margins) free returns aren’t feasible.
Two Most Common Return Policies In Parts And Accessories Ecommerce
Most return policies in our industry fit into one of two buckets:
- A “No-Hassle” return policy with free return shipping, but a 15-35% restocking fee
- A “Customer buys return shipping” policy, with no restocking fee as long as the part is unopened
The argument for the no-hassle return policy is that it’s frictionless for the consumer:
- The customer requests a return, gets a PDF shipping label by email, and then drops the box at their local UPS store
- The customer pays a flat restocking fee and gets a partial refund in a few days
The argument against a “no-hassle returns” policy: Because the return process is so easy, your worst customers will return parts that you can’t resell, so you’ll have to scrap more parts.
Customer Buys Return Shipping
The arguments for a “customer buys shipping” policy are a little different:
- A lot of customers won’t actually go through the hassle of buying return shipping, so asking them to buy will lower the overall return rate
- The type of customer who’s diligent enough to buy their own shipping is usually the type of customer who returns parts in resalable condition
The argument against a “customer buys shipping” policy: When customers have to figure out shipping themselves, they expect a full refund…and a lot of the parts that come back still have to be scrapped.
What Return Policy Is Best?
At Spork, we recommend adopting a no-hassle return policy. When you provide the customer with a shipping label you make returns painless, which is a selling point. And when you charge a standard restocking fee to every customer, the fee is less likely to be viewed as a “money grab” and more like a standard processing/handling fee (which most consumers understand is necessary).
We recommend against policies that make customers buy their own shipping for two reasons:
- While it’s true some customers won’t bother with a return if they have to do work, that fact doesn’t address customer satisfaction with a purchase they don’t want.
- Consumers tend to view retailers who won’t provide them with a shipping label as “hard to work with,” and if/when there are any other issues with the order (say, the customer doesn’t get a full refund) the customer is likely to be mad.
Mad customers leave bad reviews, and bad reviews hurt sales.
Finally, it should go without saying that customers should never have to pay any return fees for products that are:
- damaged during shipping
- doesn’t match what was ordered
- missing hardware, instructions, etc.
Retailers who charge customers for returns in the above situations can expect a mountain of bad reviews. Read more about return policies in this blog post.
Sidebar: Return Policy Pages Are More Important Than Ever
For years, Spork has helped clients create return policy pages that are clear, easy to read, and that emphasize the simplicity of making a return. We call these updated return policy pages “customer friendly” because they don’t come across as confrontational or bureaucratic. And when we roll out these updated pages, we typically see an increase in conversion rate.
And now that nearly 16.5% of consumers are returning the “stuff” they buy online? A clear, easy-to-read, and friendly return policy is critical. If your company’s return policy is a giant wall of text or has sections in ALL CAPS or has stark warnings in all red text because “customers aren’t reading,” you need to fix it. Customers who see these policies are likely to assume returns will be a problem.
So What About Amazon’s Free Return Policy?
We’re left where we started: If auto parts retailers shouldn’t offer free shipping, how can Amazon.com keep doing it?
The short answer is that Amazon might not be sticking to their free return policies much longer. Earlier this year, Amazon began charging a small fee for some returns. A recent lawsuit against Amazon by the FTC could force Amazon to reduce the fees they’re charging sellers (particularly Prime sellers). If Amazon loses seller revenue, they may decide to start charging consumers for returns. Even a small fee would make a difference, only we’d like to see Amazon adopt seller-selected restocking fees.
Inspired by Amazon.com, some parts and accessories companies will adopt a free returns policy. However, the best practice is to charge for returns, as consumers tend to abuse free returns.
At Spork, we recommend parts and accessories etailers charge a restocking fee on all returns. We also recommend a no-hassle return process where the customer is emailed a free return shipping label rather than having to buy their own shipping.
Finally, we’d point out that free return policies are likely to become less common. While there will always be free returns for some industries (i.e., fashion, home furnishings, luxury goods, etc.), most industries will charge for return shipping and/or charge a restocking fee if they aren’t already. Consumers abuse free returns, and the cost of that abuse is unsustainable.
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