Interviews, insight & analysis on digital media & marketing

Bring Back Better – The future of retail returns

By Rob Shaw, MD EMEA, Fluent Commerce

With product return rates in ecommerce ranging between 20-30% and global ecommerce sales projected to hit £4.7 trillion by 2023, the volume of returns is only set to increase. In fact, according to Narvar data, ecommerce returns in 2020 alone were up 70% compared to the year prior.

As a result, the way retailers and brands manage returns is becoming a more important part of the customer journey. Indeed, research has shown that 84% of online shoppers would refuse to use a retailer again after a bad returns experience.

But what factors have the most impact on a returns process and how can organisations optimise the experience to become a positive factor in the way they are perceived? There are a range of priorities to address:

  1. Embrace Digital Returns

Traditional approaches to returns have some inherent problems. For instance, not everyone has the printer required to create return labels, and putting a pre-printed label in every box adds both waste paper and cost. In contrast, digital returns can help boost brand sustainability credentials and potentially helps resell items faster.

By providing a return QR code on a shipping label or box, or on a packing slip for use at a drop-off or collection, retailers can print a return label while also triggering an update to their order management system. Alternatively, customers can be given the option of generating a QR code online, which can then be texted to them for easy access when the return is dropped off or picked up.

  1. Keep customers informed

When customers return products for a refund, the associated communication process should keep them regularly updated on the status of their payment. This not only helps avoid additional support calls from people frustrated about the status of their refund, but it can also build brand trust and maintain customer satisfaction.

  1. Identify customers with high return levels

Most retailers will be familiar with the challenges created by customers who both buy and return lots of products. Identifying these buy/return patterns is becoming an important step in effectively predicting the potential level of returns, which in turn, can help prevent excess stock replenishment.

  1. Monitor the lifetime value of customers

Some retailers have different returns policies or processes for high-value customers or those that tend to buy items at full price. This is an important consideration, as taking care of customers in these categories in the long term makes more business sense, so maintaining their loyalty is key. This is often true even if they have high return rates, and retailers should avoid penalising or even blacklisting loyal and active customers if at all possible.

  1. Resell returned items earlier in the process

Clearly, all returns must be quality checked before they can be re-released as saleable inventory. But products with the same SKU can often arrive in different locations, meaning retailers need to assess the average condition of returns for that type of item. In doing so, they can more quickly expose at least some of the return stock for sale online, helping to ensure greater efficiency.

  1. Optimise post processing

Similarly, the speed at which returned products can be resold also depends on the work that needs to be done on each item to get it back into a saleable condition. From washing and ironing apparel to recasting jewellery, tracking the condition and status of each item and working hard on the efficiency of the quality processes can have a significant impact on sales.

  1. Improve reverse logistics

When it comes to returns, convenience is king. While accepting online orders in-store is increasingly a minimum requirement where possible, some retailers now also accept returns at third party locations. 

But once they have been accepted, retailers then have to build an efficient process to get them back online or on the shelves as quickly as possible. This can range from processing them in-store to consolidating returned items for processing centrally. When items have to be shipped somewhere for processing, retailers must also work out the most effective logistics routes to minimise staff and transportation costs, as well as reducing their environmental impact.

  1. Returns are not a customer service afterthought

A study carried out in 2019 by UPS revealed that 54% of consumers look at the returns policy before making a purchase. This only serves to underline the importance of returns in the wider sales process, and its terms and levels of convenience will have an influence on the bottom line if customers don’t like what they see. As a result, policies should be clear and easy to find. 

Ultimately, today’s savvy consumers are becoming more familiar with returns processes and will use their experiences to inform future purchasing decisions. The key point for retailers is the way they deal with a disappointing or unwanted purchase is just as important as how well they attract customers in the first place.