Returns policy drives Australian fashion shoppers away

More than half of Australian online fashion shoppers have abandoned a purchase or stopped buying from a brand because of its returns policy, according to research commissioned by eCommerce platform Loop. The study also found that only 10% of Australian retailers view customer loss as the main financial effect of returns.

The survey included 1,000 Australian consumers who had made an online return in the previous six months and 200 retail decision-makers responsible for eCommerce returns strategy. It highlights a gap between how shoppers respond to return terms and how retailers assess the cost of managing them.

Among consumers, 55% said a returns policy had led them to walk away from a fashion brand, either by abandoning a purchase or by no longer shopping with that retailer. Retailers were more likely to focus on lost revenue or logistics costs, with 29% naming lost revenue as the biggest financial impact and 24% citing logistics.

The findings suggest returns policies now shape decisions earlier in the buying process than many retailers may assume. While returns were once treated as a post-purchase issue, many shoppers now review the terms before placing an order.

Some 85% of respondents said they check a retailer's returns policy at least sometimes before buying online, while 57% said they do so always or often. One in three said they check the policy every time.

Return fees were another pressure point, with 91% of shoppers saying they influence how they shop online in some way.

Half of those surveyed said such fees make them more careful about what they buy. Another 37% said they shop less often with retailers that charge return fees, while 28% said the charges push them back towards physical stores.

At the same time, the data suggests some shoppers may accept extra cost if the process improves. About 21% said they would be willing to pay a small upfront fee for what the survey described as a more premium returns experience.

Exchange shift

The research also highlighted a preference for exchanges over refunds if the conditions are right. According to the survey, 86% of Australian shoppers would accept an exchange instead of a return in some circumstances.

That aligns with a broader shift among Australian retailers towards exchange-based resolutions. The study found that 53% offer instant exchanges, the highest share among the markets surveyed.

Refunds accounted for 42% of returns among Australian retailers in the study, lower than in the United States and the United Kingdom. The figures suggest local merchants are doing more to retain sales value when handling returns.

Loop said this points to an opportunity for merchants that can make exchanges simple and predictable. The company estimated that shoppers' willingness to accept exchanges represented more than USD $2 billion globally for the brands using its services.

The survey also indicated that clearer returns terms may help retailers win new business. Around 34% of shoppers said they would try new brands if they had greater confidence in a retailer's returns policy, while 32% said they would buy more.

For retail operators, that creates tension between the cost of processing returns and the risk of deterring future sales. While 68% of retail decision-makers agreed that the returns experience significantly affects customer loyalty, relatively few identified customer churn as the main cost.

Hannah Bravo, Chief Executive Officer of Loop, said the figures show merchants are being judged as much on what happens after checkout as before it.

"Shoppers are judging brands on what happens after the sale, and that judgment turns into action. Looking at the data, shoppers are saying that a bad returns policy has made them walk away from a brand, whereas many retailers still aren't recognizing or acknowledging this risk. This gap represents a significant opportunity for the brands that do see returns as a driver of growth, rather than a cost center," Bravo said.

The study was conducted online by Sapio Research between May and June and focused on consumers who had recently made an online return. The sample therefore reflects the views of active online shoppers with direct experience of the returns process.

For fashion retailers in particular, where fit, size and preference often drive return volumes, the findings suggest policy design may influence both conversion and retention. A shopper who sees rigid conditions, unclear timelines or added fees may decide against a purchase before any transaction takes place.

Bravo said the outcome of the returns process can directly affect whether shoppers stay with a retailer.

"The ultimate outcome of a return experience is a major driver of customer retention, good or bad. A staggering 86% of Australian shoppers report a willingness to take an exchange under the right circumstances, and the value of that opportunity is eye-popping: over $2 billion globally to the brands Loop serves today," Bravo said.