Carpet seller’s pricing strategy shows how easier returns can protect loyalty
Retailers are making returns more difficult with fees, shorter deadlines and extra questions, risking customer loyalty and negative publicity. Gene Marks argues that businesses should treat returns as a predictable cost and include it in their prices rather than burden customers at the point of return.
Marks recalls carpet wholesaler Jerry Crawford, who set aside 0.5% of sales to cover returns based on past experience. On a $1,000 roll of carpet, that allowance added $5 to the price, which Marks says customers were unlikely to notice. He argues that tracking return costs and accounting for them in overhead can protect profits while keeping the process straightforward for customers.
- Harder returns may undermine customer loyalty.
- Jerry Crawford reserved 0.5% of sales for returns.
- Marks says retailers can cover costs through pricing.
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Many retailers are tightening their returns policies by introducing fees, limiting the time customers have to return goods, and asking additional questions before accepting returns. These stricter approaches frustrate customers and risk damaging customer loyalty.
An alternative strategy suggests that companies should treat returns as an inevitable cost of selling rather than something to discourage. They could set aside a proportion of their revenue to cover expected returns and build that cost into their prices, making the process straightforward for customers.
A carpet wholesaler named Jerry Crawford demonstrated this approach by allocating 0.5% of his sales to cover returns based on historical patterns. On a £1,000 roll, this added just £5 to the price—an amount customers were unlikely to notice whilst helping maintain his profit margins.
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The strongest fair case each way — we don't pick a winner.
The case for
Retailers should accept that returns are a normal, predictable operating cost rather than trying to shift that burden to customers at the point of transaction. By building return allowances invisibly into prices—as the carpet wholesaler did with 0.5%—businesses create a frictionless, customer-friendly experience that builds loyalty and generates valuable word-of-mouth recommendations. The cost is minimal when spread across the customer base and far outweighed by the benefits of customer retention and the reputation damage avoided by erecting barriers that frustrate purchasers.
The case against
Whilst straightforward returns processes have merit, subsidising all returns through higher prices creates unfair cross-subsidisation where careful customers effectively pay for those who return items due to remorse rather than genuine defects. This removes useful accountability that encourages thoughtful purchasing and allows competitors with more disciplined return policies to undercut on price. A fairer approach would distinguish between legitimate product defects—worth absorbing—and customer indecision, applying appropriate friction only to the latter.
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Originally published by The Guardian as “Retailers are making returns harder. A carpet seller taught me why that’s a mistake | Gene Marks”.