Easy to Buy. Easy to Return?


As online shopping grows, consumers find that the ease—or difficulty—of returning items differs greatly by retailer

Wendy Slaney, a career counselor and avid shopper, is joining millions of Americans in a post-holiday ritual: returning merchandise. And like an increasing number of Americans, she won't be heading to the mall but to the UPS (UPS) store, where she expects to wait in line to spend about $12 to return a pair of Harley Davidson (HOG) riding boots she bought for her boyfriend. She's not thrilled about the extra trip—or forking over the shipping cost—nor was she pleased that the boots' box had no packing slip or contact information from Van's Fine Men's Shoe Shop, the Milwaukee retailer where she bought them.

"I went online for the cheaper prices and the convenience of not having to spend my nights and weekends shopping in the crowds," says Slaney of Worcester, Mass. "So returns can be a nuisance. I'm hoping this one goes smoothly."

Work in Progress

Online sales surged this holiday season—up 26% from last year, at a growth rate four times faster than traditional stores. And along with the surge in sales comes the commensurate surge in holiday gift returns. But while the experience of buying online has become more popular for its ease and deep discounting, returning merchandise remains a hassle for many consumers. Trips to jam-packed post offices, costly shipping fees, and weeks of waiting for an exchange or refund stand in sharp contrast to the ease of a click and quick delivery of a gift, often with free shipping. Retail experts say that while all e-tailers are keen to sell merchandise, only some have yet realized the need to treat customers well when they return purchases.

"Some companies figure they don't have a relationship with the person getting the gift, so there is less emphasis on making the return process smooth," says George Whalin, president of Retail Management Consultants in San Marcos, Calif. "But the smart ones know it's worth investing the time or money to please a potential customer."

Online returns policies for many companies are still a work in progress, and customers' experiences vary by store. The range of return policies ranges from the uber customer-friendly to the more basic. Consumers like Slaney praise shoe retailer Zappos, which pays shipping costs in both directions, and L.L. Bean, which accepts returned items years after they're purchased and even offers exchanges and credits without a receipt. Such generosity could incur steep costs or leave stores vulnerable to fraud, but these retailers' focus is on long-term loyalty rather than short-term cash flow.

"It's an honor system," says Dave Teufel, a spokesman for L.L. Bean of Freeport, Me. "We've been in business for 95 years and we've not found abuse an issue. Our focus is to ensure customers are completely satisfied." Teufel says online sales surpassed catalog sales this fall for the first time.

Buy Online, Return at Store

Larger stores don't take risks with such liberal policies, although many have sought to simplify the online return process. An increasing number of retailers such as BestBuy Stores (BBY) allow online customers to return items to brick-and-mortar stores, though Best Buy allows each customer only one return without a receipt. Retailers like Target.com (TGT) and Amazon.com (AMZN) offer gift receipts with the package and do not list the price of enclosed items—though such receipts aren't available for every item on Amazon, which can be awkward for gift-giving. Like many retailers, Wal-Mart (WMT) has customers pay for shipping costs on return items if the item isn't defective or the result of a company error. And the wait can be as long as three weeks for an online return to Wal-Mart.

A Wal-Mart spokesperson said the company's online return policy has not changed in response to an increase in online purchases, and that the system works well because there are so many brick-and-mortar stores to accept merchandise returns from online sales.

Overall, consumers were happy shopping online this season. A survey released Dec. 19 by Shop.org and Shopzilla showed that more than two-thirds, or 71.2%, of online shoppers surveyed said they were "very satisfied" with their online holiday buying. But it remains to be seen how cheerful these buyers will be as they pack up items and ship them back for returns.

Naughty or Nice?

"I don't like having to pay return shipping if something doesn't fit—it gets expensive," says Jim McGrath, 51, also of Worcester, Mass. Frequent online shoppers like Slaney are developing lists of companies they'll continue patronizing online and those they'll skip.

Slaney said that after a series of problems with Victoria's Secret, for example, she'll never buy from them online again. She said the company, a unit of Limited Brands (LTD), claimed that a package of items she returned had never arrived. After seven weeks of disputes, she ended up with a $50 credit for $79 of merchandise. A Victoria's Secret representative did not immediately return a phone message.

"I'm done with them now," says Slaney. But she says the experience won't stop her shopping online; it'll just make her choosier about who gets her business—and from now on, she'll insure all returns and request a return receipt.

Herbst is a reporter for BusinessWeek.com in New York.

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