Reining in Returns (Is it Possible?)

Nobody loves returns. Not the customer sending back a disappointing purchase nor the business that was counting on the original sale. 

No matter how amazing your product is or how timely its delivery to your customers, returns are just part of the cost of doing business. That doesn’t, however, mean there’s nothing you can do to decrease return rates—often drastically. And if done correctly, your returns process can even help you to retain and win new customers.

The High Cost of Returns

Did you know that customers collectively return products worth $428 billion? That’s over 10% of all retail sales in the U.S. And return rates for online retailers are even higher. Up to a quarter of customers return up to 15% of their online purchases. In 2020 alone, it added up to $101 billion. Ouch!

Today’s customers have come to expect fast, hassle-free – and FREE returns. But excessive returns are costly to brands - attacking profit margins, skewing conversion rates, and threatening successful businesses. What’s even worse is that some returns may be due to fraud. This can lead to retailers who strive only to protect themselves and their bottom line rather than creating a customer-centric return policy.

Why It’s So Important to Get Returns Right

Compared to in-store sales, online purchases are much more likely to be returned—from around 9% in-store to 20% to 30% online. Often, this is due to the customer being unable to touch and feel the product to ensure it fits correctly or performs as expected.

The main reasons customers report returning a product are because it doesn’t fit (52%), they changed their mind or didn’t like the style (12%), the product wasn’t as described or expected (5% to 22%), they received the wrong item (23%), or the product was defective or damaged (5% to 20%).

Many retailers have responded to increased return rates by rethinking their return policies, choosing to make them more stringent or difficult, or charging return fees. Unfortunately, this approach can backfire as many shoppers—especially when purchasing products from online retailers—will only shop with retailers that make returns easy and free.

In fact, up to half of customers report a retailer’s policy will determine if they shop with them at all—with 67% checking out the return policy before hitting the buy button. When surveyed, 58% looked for a hassle-free, no-questions-asked return policy, and 47% looked for easy-to-print return labels. Customers who know they can get their money back for products that don’t work out are more likely to spend more, with more confidence. That can build trust with you, the retailer, which is vital to your company’s long-term success.

Customers also have high expectations for how quickly they can expect to receive refunds—with many expecting their refund within just a few days.

After the sale, retailers who are unable to create a positive return experience may turn away repeat customers. Worse, one negative experience can be multiplied many times over via negative reviews and customer complaints on social media.

On the other hand, getting returns right can increase the chances of customers returning for repeat purchases. So, making returns less complicated and less costly can increase sales and should be considered a marketing cost rather than a loss.

Fortunately, you can take steps to limit returns and streamline the process of reverse logistics to help protect your business and your bottom line while encouraging customers to make their first and next purchases with your brand. 

Reining In Returns

How you think about returns can greatly affect how your company deals with them. For instance, you can think of them as a “necessary evil,” or you can think of them as a way to build customer relationships and trust. Again, when done well, the returns process can help enhance sales and promote positive word of mouth—even with customers who return products! 

There are several ways to help rein in returns, including:

• Ensuring your product information is accurate, clear, and easy to find: Accurate product descriptions, which include photos or videos from all angles, detailed measurements, including weight and dimensions, materials or ingredients, colors, sizing guides (including how to determine measurements), and simple instructions for use or care. No detail is too small.
  
  When selling foods or supplements, for instance, providing the list of ingredients—including common allergens—can allow people to review the label before they receive the product, so they don’t order products they may not be able to consume and thus need to return. 
  
  When selling clothing, on the other hand, if the sizing is incorrect or the color or fit isn’t as described or as pictured, this can lead to an immediate return and, potentially, low ratings or reviews, which can damage future sales of the item.
  
  Remember to only use photos of your products as they are. While it’s tempting to stylize, edit, or change up the lighting spectrum, this can lead to disappointed customers who don’t see the same thing in person that they saw in the photo.
  
  
• Hassle-free, easy-to-understand return policy: You want to ensure your returns policy is both easy to find and easy to understand, including how long customers have to return items, any associated costs, and if specific products are not eligible for returns (such as discontinued, deeply discounted, or holiday shopping specials). Always err on the side of being open, upfront, and honest with your return policy.
  
  Also, remember your return policy is for your customers—not just those with advanced legal or technical knowledge – so keep your wording approachable and easy to understand with clear fonts and language. 
  
  And if you get complaints about your returns process, be gracious, and use that feedback to update it to provide a better shopping experience for future orders and customers.
  
  Automatic low-stock alerts prevent selling products you may not be able to fulfill. This way, you don’t have to manually keep track of all of your products, which can help you avoid costly mistakes and backorders.
  
  
• Keep customers in the know: Once your customers start the return process, they’ll want to know the next steps. Use this as an opportunity to communicate with your customers and keep them informed of what’s happening in the process—from printing out return labels to receipt of the return and status of their refund. 

• Secure Pick, Pack, and Ship: One common reason for returns is that the product was damaged when received. Of course, you wouldn’t ship out a defective item, so it most likely was damaged during shipment. Yes, the delivery carrier plays a role. However, packaging and shipping a product well can help limit the risk of damage in transit. Our team has the expertise needed to package products using the right protective material in the correct sizes, so they don’t justle around during transit, which can help prevent damage as the product travels to its destination.
  
  
• Return-to-Stock Optimization: Often, though not always, the returned product is still a good quality, salable item. By meticulously monitoring returned products and following your specified returns policy, our team can help refurbish, repair, and repackage items and ensure resalable items are returned to inventory. This not only saves on costs but prevents future customers from receiving potentially faulty or damaged products only to be returned again.
  
  
• Same-Day Refunds: Our quality reverse logics department can work with you to process and return refunds quickly and seamlessly to delight customers, even if the original product wasn’t exactly what they wanted.
  
  
• Custom Labeling and Packaging: By including customized packing slips and inserts and customer codes or authorization, we can take the hassle out of returns for customers, which builds trust with your brand. It can also help reduce costs for you by minimizing packaging and postage costs for both shipping and returns.
  
  
• Best-in-Class Order Accuracy: While there’s no way to eliminate all errors, we do our best to try. That’s resulted in 99.8% order accuracy, which means you’ll minimize orders returned because your customer received the wrong product.
  
  
• Shopping Cart Integration: You also won’t have to worry about technical glitches interfering with orders or returns from your shopping cart to your fulfillment center as our system supports today’s most popular eCommerce and CRM platforms to track and fulfill orders. As a bonus, this also helps protect your company from risky transactions and customer fraud.
  
  

Protecting Your Business from Return Fraud

As a business, it’s important to find the right balance between delighting your customers and protecting yourself from fraud. An estimated $5.90 is lost for every $100 sold by businesses due to return fraud, which can include people trying to return stolen items to claims that a product was never delivered to falsified receipts. There are steps you can take to help protect your eCommerce business, such as: 

• Working with carriers that provide tracking numbers or proof of delivery
• Providing store credit instead of cash refunds
• Limiting exchanges to a specific window of time (such as 30 or 60 days)
• Avoid including free return labels in the package
•  Requiring proof-of-purchase with returns
• Providing return authorization numbers only with items that match up with the returns policy

Managing Returns

Even when you sell the perfect product, returns are still inevitable. Whether your customer wants an exchange, a refund, or store credit, part of good customer service is ensuring the process is easy and provides a great shopping (and returning, if necessary) experience. Fortunately, with a few small tweaks, the right fulfillment and reverse logistics partner, and some diligence, you can better manage returns and use them to help build customer loyalty while protecting your business. 

Contact us today and speak with one of our experts about how we can help you take the stress and dread out of the returns process.

References: 

• https://nrf.com/media-center/press-releases/428-billion-merchandise-returned-2020
• https://www.retaildive.com/library/rakuten-whitepaper-the-right-fit/ 
• https://home.barclaycard/press-releases/2019/05/retailers-rethink-returns-policies-as-increase-in--serial-return/
• https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/