For Jack Ma, executive chairman of Alibaba Group Holdings, today is an extremely busy and lucrative day because the company he founded 15 years ...
To compete with free shipping and free returns, the retailer reimburses shoppers for 110% of the purchase amount on any returned items.
Online retailer Surfboards Etc. has found a novel way of competing with its competitors’ free shipping and free return shipping promotions. Since July, it has offered to send customers 110% of the purchase price on any returned items. The cost of the small number of checks issued to customers above the cost of returned items is “negligible,” says Adam Swiecki, the company’s president. But with year-over-year sales up 40% so far in December the new policy appears to be getting consumers’ attention, he says.
That was the whole idea behind the notion of a 110% refund, he says. “We spent a lot of time trying to figure out what would pique customers’ interest and what would make a customer comment to their friends about our site,” he says. “We thought actually receiving a check in the mail from us would be noteworthy.”
For example, Surfboards Etc. refunds the purchase price of a $200 watch to the shopper’s credit card upon receiving the returned watch at its warehouse. It then also cuts a check for $20 and mails it to the customer. The message to customers is that the company appreciates that the shopper spent time researching, buying and then ultimately having to return the product, and that the 10% extra refund is a way of compensating them for their time and trouble for a purchase that didn’t work out.
Swiecki estimates his return rate at 2-3% and the total cost of the additional 10% refund on returned products at less than $1,000 per month. That compares with a monthly online marketing budget of tens of thousands of dollars. While sales are growing, he grants that he doesn’t yet have the tools to calculate a hard return on investment on the program, though that’s in development.
“We were going to develop a sophisticated way of tracking ROI, which is what I typically do for every dollar we spend in the marketing effort. But in the end we just wanted to get it out there,” he says. For now, he’s judging the success of the effort in feedback received in customer calls and e-mails. “’You’re the kind of company I want to deal with’-that’s the kind of comment we’ve been getting,” he says.