Recent research has illuminated a significant trend in online retail: nearly one in every five items purchased through digital platforms is returned by consumers. While this pattern is expected in the realm of e-commerce, it creates a complex and costly dilemma for retailers. The expenses incurred in processing, restocking, and sometimes refurbishing returned merchandise frequently outweigh the revenue from reselling these items. As such, the traditional return model has become financially unsustainable for many businesses, particularly as online shopping surges.
In response, a growing number of retailers have begun adopting what are known as “returnless returns” — policies that allow customers to receive refunds without sending the item back. Instead, consumers are often told to “keep it.” What began as an experiment in customer service and logistical efficiency has evolved into a common retail strategy. Data from a 2023 survey of over 500 retail executives revealed a dramatic shift: 59 per cent had implemented returnless returns, up from just 26 per cent the previous year. This change reflects an industry-wide reevaluation of how best to handle post-purchase dissatisfaction without compromising profit margins.
The rationale behind this approach extends beyond mere cost containment. According to new research conducted by John Costello and Christopher Bechler, assistant marketing professors at the University of Notre Dame’s Mendoza College of Business, return policies also have a noteworthy psychological effect on consumers. Their forthcoming article in the Journal of Marketing Research explores how these policies enhance brand perception and strengthen customer loyalty. Drawing on nine empirical studies — spanning laboratory experiments, field tests, and online surveys — the researchers found that customers offered a returnless option were more likely to make repeat purchases and recommend the brand to others. This effect was pronounced when the returnless decision was presented as a personalised, considerate gesture rather than a cost-cutting tactic.
Several key factors amplify the positive impact of returnless returns. When customers are not required to provide proof that an item is defective or unwanted, and when the refund decision is framed as unique to the individual case, the gesture feels generous and authentic. Additionally, perceived brand warmth increases if the brand encourages the recipient to donate the item or explains the returnless decision regarding environmental responsibility or customer care. These human-centric communications are critical in an age where impersonal digital interactions often leave consumers feeling alienated or undervalued.
Contrary to popular belief — and even the researchers’ own pilot study with retail professionals — cost reduction is not the sole or primary driver of success in returnless return policies. The team found that returnless returns could generate more brand support than simply delivering a product that meets expectations and requires no return. This finding challenges traditional assumptions in customer satisfaction research, suggesting that how a company handles problems can be more impactful than whether issues occur in the first place.
Brands are adopting returnless policies in a variety of ways. Some, like Chewy and Bombas, have instituted blanket policies that apply to all customers, regardless of product type or situation. Others, including Amazon and Walmart, assess each case individually. The study, however, indicates that selective implementation — when done correctly — may be more effective. When consumers feel they receive personalised treatment, particularly through human interaction rather than automated responses, their emotional connection with the brand deepens. This perceived “special attention” enhances trust and loyalty more than a universal policy might, which can feel impersonal or even algorithmically indifferent.
Ultimately, the study offers concrete guidance for retail managers looking to leverage returnless returns as a cost-saving measure and a brand-building tool. Communicating a genuine customer-first philosophy, suggesting charitable reuse of items, and emphasising care in personalised messages are all strategies that can make these interactions feel more human and more meaningful. As Bechler summarised in one example, “When managing returns, our primary goal as a company is to make our customers’ lives better… please do whatever you want with these items.” Such messages shift the focus from transaction to relationship and policy to empathy. This reorientation may prove invaluable for retailers navigating a competitive digital landscape and cultivating enduring consumer trust.
More information: John Costello et al, Just Keep It: When and Why Returnless Product Returns Foster Brand Support, Journal of Marketing Research. DOI: 10.1177/00222437251337723
Journal information: Journal of Marketing Research Provided by University of Notre Dame