How long does it take retailers to refund shoppers after a returned purchase? How long should it take? Traditional financial systems do not operate at the same speed as e-commerce shoppers expect. Trustly recently conducted a survey looking into the financial burden this disparity is placing on consumers.
The headline figures are startling. In the past year alone, more than £3.5 billion of UK shoppers’ money has been held hostage in online refunds, with four in 10 having to wait between three and five days for their money to be returned.
The main sources of these refunds come from three major retail categories — clothes and accessories (50% of refund requests), technology (20%), and home and garden (19%).
The most worrying findings, however, came from the questions we asked consumers about the impact long waits for refunds are having on them.
Almost half (45%) told us that slow refunds are hampering their ability to make financial plans, which means they are more likely to resort to taking out loans and paying interest on debts.
More than a quarter of respondents (28%) said they had been directly impacted regarding their capacity to pay bills, rent and mortgage contributions as a result of having money tied up in online refunds.
Our research also uncovered a generational divide. Nearly one in three (29%) consumers aged 18 to 24 admitted that money being trapped in long-winded refund processes is impacting their ability to pay for essentials like food. Only 5% of those aged 55 or over reported the same issue.
An opportunity for retailers to boost brand loyalty
The state of online refunds is a problem, especially given that a large majority (71%) of UK consumers now prefer to pay for things via debit. It shows they seek reassurance that their choice of payment method isn’t going to land them in debt.
By offering quicker, more convenient and flexible refunds, online retailers can embrace this consumer dynamic and help gain more control over their spending. Yet, in order for this to happen, reliance on legacy systems and laborious internal processes must come to an end.
Our data provides the business case for this transition. Of the more than 2,500 shoppers surveyed, 63% said that they were more likely to spend money with the same e-commerce retailer if they received a refund quickly.
Put simply, faster refund processes will ensure shoppers are back online sooner and with greater frequency.
The pandemic has been tough for many. By supporting consumers’ cashflow through efficient and fast refunds, online retailers can also boost their own bottom line and enhance brand loyalty.