Photo: L.L.Bean
Should L.L.Bean ditch its legendary return policy?
Looking for ways to cut costs, L.L.Bean may overhaul its generous return policy and eliminate year-round free shipping.
The retailer last week told employees it is offering voluntary early retirements with a goal of cutting about 500 jobs. Following a trend at many Fortune 500 companies, L.L.Bean is also freezing its pension program. At the same time, it is boosting contributions to employees’ individual 401(k) plans, expanding parental leave benefits and offering more flexible work hours.
The changes, which go into effect in 2018, were being explored before Steve Smith was hired as CEO early last year. Mr. Smith told The Associated Press, “As long as your expenses are growing faster than your sales, then you’re not able to invest in growth. What we’re focused on is getting to where we’re back in growth mode.”
Company officials also indicated that they are reviewing other aspects of the company, including shipping and return policies and plan to offer more details later this year.
The famed “100 percent satisfaction guarantee,” in place since the company was founded just over 100 years ago, basically allows customers to return any products, no matter how old, for a full refund.
“Fraudulent returns have been a problem and we are definitely reviewing our policies, but we have made no decisions,” L.L.Bean spokeswoman Carolyn Beem told the Boston Globe. “We will always stand behind our products.”
L.L.Bean has been offering year-round free shipping since 2011, a time when Zappos was the only other major retailer offering the perk. Since then, Nordstrom, Neiman Marcus, Bonobos and few others have introduced year-round free shipping. Other major retailers in recent years have lowered minimum purchase levels to qualify for free shipping. Best Buy and Target last year offered free shipping during the holiday season.
- Free Shipping to The U.S. And Canada Every Day – L.L.Bean
- 100% Satisfaction Guaranteed – L.L.Bean
- L.L.Bean looks to cut costs, debates free shipping, return policy – The Associated Press/Chicago Tribune
- L.L.Bean offers employee buyouts, ends contributions to company pension plan – Bangor Daily News
- Have you ever returned L.L.Bean merchandise years after you bought it? Now’s the time to clear your conscience. – Boston Globe
Discussion Questions
DISCUSSION QUESTIONS: How important is L.L.Bean’s legendary return policy to its overall success? What adjustments, if any, would you make to the retailer’s shipping and/or return policies?
Poll
BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Shawn Harris
Board Advisor, Light Line Delivery
I think the importance of L.L. Bean’s legendary return policy is overstated in the new age of easy returns we live in. While there’s no question that their returns policy says a lot about their brand and commitment to customers, is it really necessary to offer “no questions asked” returns on virtually anything, any time, for any reason? I’m not sure it does. Would a one- or two-year full guarantee still offer the same benefit and eliminate potential returns abuse? I suspect that it would.
I commend L.L. Bean management for challenging their own assumptions and slaying a few sacred cows along the way. To me this is a sign of thoughtful leadership.
Mark, I completely agree. A one- or two-year full guarantee is still more generous than most retailers. I don’t think setting a time limit on returns would impact sales or consumer confidence.
No. No. No. Just as online retailing is being recognized as the future L.L. Bean CANNOT make returns more difficult.
It has become table stakes and any limits on that policy will hurt the brand.
What was at one time a differentiator is today simply a best practice.
Clamping down on abusive and chronic returners is a good idea. However, L.L. Bean should hold to their core values of cherishing the customer and making service quality their top priority. Part of that is an exceptional, and hassle-free returns policy. The danger they face is tinkering with a policy that has brought them copious customer praise and contributed to part of their legend. Let’s face it, most retailers would give the world to become a “legendary” brand.
L.L. Bean’s price for this brand status is an AMAZING returns policy. Management should consider their next move with great care.
L.L. Bean’s return policy is one of their competitive differentiators. And in general a good return policy is what helps makes a consumer’s decision to buy. When I talk to my clients about cutting expenses, I steer them toward cuts that won’t be felt by customers. I get that there are fraudulent returns, but I caution any company about making rules that are based on a small percentage of customers, yet impact all. In other words … Don’t punish all of your good customers for the sins of a few!
L.L. Bean is having a problem with its retail assortment, not its legendary return policy. The store tries to be all things to all people and has moved away from its core offerings, to the detriment of the brands and its sales. It’s non-sportsman offerings are ordinary and similar products are available at a wide variety of competitors, frequently at a better price. L.L. Bean needs to return to its core brand message, which might mean downsizing it product assortment rather than helter-skelter growth.
Living in Atlanta in the old Rich’s heyday and with their legendary return policy, I can tell you that when they put an end to it, there was lots of talk but no losses. They remained a bit more generous than many in their returns but simply would no longer take anything back no matter how old. I don’t know the impact on the bottom line but it worked.
As for year-round free shipping? I really think it’s time to put our foot down about this before more retailers lose their shirts. Customers are not stupid, they know someone has to pay for it, they just hope it isn’t them. Be transparent and find ways to delight and surprise the customer but reel in that year-round free shipping.
For my 2 cents.
The problem with these policies is that taking something away from the consumer never tastes good. Free shipping is one of those prerequisites. A liberal return policy, for those who are not abusing the privilege, is a welcome feature also. L.L. Bean could attempt to charge for shipping when the order total is below a certain minimum. That appears fair. As for fraudulent returns, without having the statistics it is difficult to tell how severe the problem is and if it is worth doing something about it. The company could insist on proof of purchase (from a retail store) but many bona fide customers will not be able to provide one. Online purchases should be easy enough to confirm.
Free shipping and free returns are now entry-level tickets to modern e-commerce. In fact we now live in a returns economy. L.L. Bean is very wise to review this policy and determine if it still makes sense.
$1 saved in returns prevention equals $20 in new sales activities. There are no other places that retailers can find such an ROI.
Sure some customers will be upset and churn, but perhaps these are the customers that L.L. Bean wishes to minimize. I would not be surprised to see L.L. Bean follow what Costco did years ago with respect to their open-ended returns policy. Retail is under intense pressure and returns may very well prove to be the final battleground that determines the winners and losers.
Well said, Peter. Why do we think that changes in some areas are acceptable (i.e. consumer behaviors) and not others (i.e. return policy)? Usually things have to change to get better and this must certainly be true when “returns” is the biggest supplier and retailers expose their bottom line in fear of revenue and loyalty. In some categories (fashion/footwear) more rigor on the return policy is reasonable. If consumers love a brand, they will respect it. Some explanation on policy goes a long way.
I commend L.L. Bean for aggressively looking at their programs to see what works and why. Just because you have done the same thing the same way for years does not mean it is the best way to operate. Free shipping is one element that works for most if not all online retailers. But a liberal return policy has to have limits or abuses will occur. I would think they could look at a six month or less return policy for starters.
Wait — you can return an item 40 years later? That just doesn’t make any sense. L.L. Bean can retain a generous return policy without giving customers a blank check to defraud them.
Yes, kill the overkill on returns. In the old days of little or no internet people could be trusted and the return policy worked well. But as Boomers grew older and the internet expanded so did crime.
It is criminal that L.L. Bean and other retailers pay the price for technology in retail, but tech grows and morals shrink. Kill the policies, save L.L. Bean the costs and your loyal customers will stay with you. Let the criminals or low-moral shoppers look for another sucker. Crime costs us all.
Having worked for Kohl’s for 24 years, I have a bias toward more forgiving return policies. Kohl’s always viewed its return policies as a competitive advantage and marketing practice (even though there was plenty of gnashing of teeth among the merchant ranks) and I believe this is still the case. Stores can maintain this kind of trust with their customers, even if they look at tweaking the policy through issuance of gift cards for goods returned without receipts or after some time has passed.
I’d be very careful if I were L.L. Bean to walk away from part of what has defined its brand for a long time. As another panelist suggests, look for other reasons why costs are rising faster than sales, starting with merchandise assortments.
If there is a high level of abuse then address the reasons why before embarking on a widespread policy change that may hurt the brand’s perception among customers. Imagine the reaction just in the social network universe alone! Share of wallet is under assault — don’t put it further at risk with a new PR nightmare.
A core part of the L.L. Bean brand promise is their unquestioned lifetime guarantee, changing this fundamental ideal will undermine their brand and could gravely hurt the company’s revenues. All of the products they sell are outdoor basics, which are broadly available … even the famous duck boots. Given their premium pricing, without the lifetime guarantee they open themselves up to easy switching to alternative brands. I do believe that they should leverage improved analytics to better understand individual return behavior and possibly implement staged messaging at the point of sale and other methods of deterrence to make people simply think twice about making that return.
Management needs to think long and hard about what the core philosophy has been and what they want it to be and then make decisions — about assortment, return policies, growth, logistics. How do they want to be known in the future? Is it consistent with customer images from the past? Making changes about shipping or return policies without considering their core values and customers is a recipe for disaster.
L.L. Bean is a legendary brand built on great products and exceptional customer service. Guiding the brand and the business through the 21st century requires revisiting all assumptions and processes. This means making any needed changes as well as doubling down on the company’s core values.
While current market conditions create the context for managerial decisions, stated values of company founders continue to frame the range of acceptable business decisions. Yet we do know that what has worked in the past may be out of touch today.
For L.L. Bean, more restrictive changes to their return policy will be a risk to a reputation established since 1912. However, that does not mean that the company cannot use technology to identify and deal with the worst returns offenders. There is no reason to make wholesale changes to a policy upon which the company was founded in order to address a small fraction of their customer base while alienating their core customer.
The return policy is integral to the LLB brand proposition — that is, being “not an ordinary company” but of being more of a lifestyle and a mission. When you get returns, you are getting repeat engagement, which is not a bad thing. Now you do have to manage the P&L, so I would focus on eliminating the outliers, the people who are taking advantage of the system. Any other cost-focused cutting of the brand proposition must account for the inevitable attrition that comes from straying away from the benefits that comprise the brand.
The ease of returns, reverse logistics and most importantly customer loyalty is too fragile of a value proposition for L.L.Bean to sacrifice. While in this day and age, there are more competitors offering free returns, L.L.Bean could ill afford to add any friction to their loyal customer’s shopping experience.
Its widely known that the returns experience is crucial to maintaining a positive customer experience. There are far too many choices, competition for L.L.Bean to lose a key differentiation, in this time when customers are demanding a seamless shopping journey.
Several colleagues and I discussed the importance of a seamless returns experience in greater detail here.
You can economize in many ways, but never at the expense of your core brand promise. I don’t know whether the “No questions asked,” policy is being abused, or at what level, but it is foundational to the L.L.Bean brand identity. Unless the numbers are way out of line, I would leave it alone. It’s iconic in the same way the Craftsman lifetime guarantee on hand tools is. Do people find broken hand tools in the street or at yard sales and bring them back to Sears? Of course they do. Does that warrant a change in policy? I don’t think so. The same is true at L.L.Bean.
L.L.Bean’s return policy could stand to be changed. Fraudulent returns are one of the biggest problems they are facing and anybody can see that. Caring for the customer and standing by your product is one thing, but leaving yourself open to losses and depending on the honesty of society is not a very sound business decision. It’s a great idea if you’re successful and strengthens the brand image considerably, but it’s a completely different story when you’re looking to cut costs/losses.
Free shipping, however, has become one of those conveniences that consumers have come to expect from retailers. If providing free shipping is costing the company simply too much, it would be better to amend the shipping to have a minimum order size, which is reasonable.
While L.L.Bean’s liberal return policy has been a well-known customer perk for the brand, it may be time to evolve the policy to help curtail customer abuse. Free shipping, on the other hand, isn’t as easy to change.
The consumers that will be most disappointed by the “return anything purchased from us at any time” policy are those that are taking advantage of the policy. Upsetting those customers might not be a bad thing. Moving to a stricter return policy should be evolution. For example, anonymous customers could have a shorter return policy than loyalty members and L.L.Bean could start with a 5-year return limit and gradually move to a 2-year return policy. Customers that love L.L. Bean will remain loyal customers, because they know the product quality is always top-notch and the unlimited returns policy is not the driving factor in their purchase decision.
Free shipping is another story. Consumers have come to expect free shipping on most retail websites. Retailers need to bake the cost of shipping into the price of products. About the only thing retailers can do is set a minimum purchase price for free shipping, like $50.
I live in Maine and am a loyal L.L.Bean customer and changes to their return or shipping policies will not change my opinion of the company or my purchase decisions. In addition to offering super high quality products, L.L.Bean offers phenomenal customer service. Their store associates are extremely knowledgeable and they take time to get to know you and understand your needs. The personalized, old-school approach is far more important than the unlimited return policy.
I saw this report last week and took a deep breath. Oh no, L.L.Bean is in trouble!
Back in the day, I ran the Eddie Bauer store in Boston. My shoppers came in with the L.L.Bean catalog and shopped. Coming from Chicago, I had no idea about the passionate relationship folks had with Bean. I learned it too when I brought my staff unannounced into the Freeport store and the store manager gave all of us a behind the scenes tour.
Before Bean tinkers with its policy, it should close some of its stores. At least, it needs to ensure the current store model is as profitable as it must be. The return policy is not the only sea anchor on profitability.
I was out of Eddie Bauer before it got crazy with massive stores. As we know, EB is toast and the death came in part from those stores. I was a part of Sears when it changed the Craftsman return policy. It was among the debilitating shifts Sears made in the past 20 years. All of which contributed to its pending demise.
Please do not change the policy. It is core to the shopper equity in the brand.
As both Eddie and Leon Leonwood would say, “retail ain’t for sissies!”
L.L.Bean needs to evaluate their core brand identity — if the unlimited return policy is truly a defining characteristic of the brand (as I’d suggest it is), then there is significant risk in altering it too casually. Modifying it with a “softer” policy that grants store managers more liberal guidelines to accept or reject an overly abusive return (say, when someone tries to return heavily worn out clothing after a decade) based on its individual merits may be a better option. Costco has had a similar approach for some time although even they implemented more limited return policies for certain types of merchandise over time.
Ultimately, even loyal customers are buying because of the policy — even if they never abuse it — as they find it reassuring from a legendary brand. Rocking that boat is a high risk proposition that could alienate the best customers.
The trust that people put into the quality of L.L.Bean product may be their most valuable asset. I have watched the depth and breadth of their promotional activity over the last two winters and it’s amazing to watch them take 10 percent to 15 percent markdowns on some items while the mall is at 50 percent or more. Customers believe the ticketed price is the real price for a reason. I am sure there is abuse of the return policy and that some careful refinements can be made, but I would caution them to proceed carefully. This is not fast fashion or disposable fashion or even fashion. The brand is all about the predictability of the quality. The word “forever” does not have to be part of the return policy, but durability and longevity of L.L.Bean product is a big part of the brand promise. Tread lightly with changes.
L.L.Bean’s return policy feels part of the overall culture and enjoys a position similar to their boots, Nordstrom’s customer service and Target’s bullseye. It feels like more of a brand asset than an operational one. They can tweak it, but they should keep quiet about it. Things like this signal differentiation in the market. Heritage is tough to fake. They shouldn’t mess with it.
Shipping is more malleable. They were shipping way before the new kids on the digital block, so they can play with minimums, or seasonal offers. There’s probably an opportunity to build a loyalty group of good customers that have special perks, but they may run the risk of of making it too complicated for their best, longtime customers.
As we move through this time of retail flux, we need to be very careful about squandering assets like heritage, authenticity and culture. There is something untouchable about a return policy that has been in place for over 100 years. I hope they’ll be able to say that at the 120 and beyond marks.
I would not embrace this new strategy. This is a low cost competitive differentiation when marketed effectively. What L.L.Bean can do is re-entrench its foundational origins and authenticity internally. Identify its ideal customer base(s) and markets. Innovate to align strategies and marketing to embed itself in the lives of each.
L.L.Bean competitor REI, Inc. ditched its unlimited return policy in 2013 as fraudulent returns began to increase. It was a bold move, especially since L.L.Bean’s policy remained in place. REI not only survived the fallout but thrived. It continues to rank with Dick’s Sporting Goods among the top sporting goods stores in a crowded, oversaturated market. The point is that giants must adapt.
L.L.Bean went from slow growth to flat sales, and now it must make adjustments to compete. Changing to a one- or two-year return policy is still a much better policy than that of competitors, and I doubt that will hurt the company. Even consumers understand why it needs to be done and respect the brand. CEO Steve Smith understands the competitive retail market inside and out — enough to know that this is a necessary change.