Consumers opt for in-person returns, turned off by online-only option

With the holidays looming, a new survey found that a majority of consumers are fans of in-store returns.

Happy Returns’ third annual “Returns Happen” study found that 67% of consumers ranking in-person returns as the No. 1 preferred return option, up 26% from last year, while 90% of consumers say they avoid or refrain from shopping with retailers who offer mail returns as their only return option.

Happy Returns, a PayPal-owned software and reverse logistics company that works with online merchants to handle product returns, said the increase in the preference for in-person returns is driven in part by retailers introducing or raising return fees, as they attempt to regain lost profits from the growing number of returns.

More than eight in 10 (81%) retailers started charging for at least one return method in the last 12 months, which has led to mixed results in terms of customer satisfaction and sales.

"We continue to see retailers seeking out new ways to mitigate the negative impact of returns on their business, while still meeting the needs of shoppers and maintaining customer loyalty," said David Sobie, VP and co-founder of Happy Returns, a PayPal company. "This year's study shows that now, more than ever, retailers can achieve this balance by offering in-person, box-free returns across an extensive network of locations, with real-time item validation and immediate refunds."

More than half (53%) of retailers surveyed who increased return fees saw a reduction in return rates, and a similar number (48%) of these retailers reported a decline in average order value and an increase in customer complaints. Additionally, one in three retailers claimed they had lost customers as a direct result of adding return fees.

Of the retailers who implemented new return fees, nearly six in 10 (59%) said they saw an increase in shoppers choosing the free return option they offered.

Happy Returns found that more than 80% of consumers check a retailer's return policy before making a purchase with a retailer for the first time. More than half (55%) of the consumer population surveyed have abandoned an online shopping cart if the return policy wasn't convenient.

[Read more: Here’s what customers like – and don’t like - about returns]

The survey also found that consumers are more willing to make a return if it's at a nearby location to them,  with a whopping 94% of shoppers surveyed willing to travel up to 2 miles, and 82% up to 5 miles for an in-person return. Nearly seven in 10 (68%) shoppers are more likely to shop with a retailer that offers in-person returns at convenient, nearby locations.

For the survey, Happy Returns sampled 2,000 U.S. consumers who returned an online purchase within the past year and 200 U.S. senior-level merchants with revenue of $500 million or more.