As the peak season approaches you’re no doubt getting your core business operations prepared for an influx of orders. Inventory, check. Supply chain, check. Fulfilment, check.
But, what about your returns?
Contrary to conventional wisdom, returns can now be a profitable, competitive advantage for your business. Keep reading to find out how.
Why returns matter
For many retail and eCommerce operations managers, the very word ‘returns’ sends a cold shiver down their spine. Returns are called the ‘billion-dollar problem’ for good reason.
If you don’t have the appropriate processes and partners in place, returns can prove to be a major headache. According to research by consultancy firm KPMG, the costs associated with returning an item can be twice the cost of delivering it in the first place. (Yes, you read that correctly!)
However, before you decide returns are not worth the hassle, you should consider some important statistics from UPS’ Pulse of the Online Shopper Report:
- 68% of survey respondents agreed that the returns experience shaped their overall perceptions of a retailer.
- 56% of respondents said they were put off making a purchase because of an online retailer’s returns policy.
- 73% of survey participants said that their overall returns experience decides whether they will purchase from a retailer again.
- 50% of shoppers have abandoned a purchase because of a lack of return options.
Those are some big percentages. To be frank; you can’t afford to ignore returns.
In a fiercely competitive online retail environment, you don’t just need to offer returns. You need to offer a return process that is easy, friction-free and transparent.
That’s why you should be getting on top of your reverse logistics way ahead of your peak selling season. Because, if you get your returns right – you’ll benefit both now and in the long run.
Guide – read our guide to using returns to build customer loyalty here.
How to optimise your returns process for a competitive advantage
Returns can be costly, time consuming and unpredictable. Yet, as the figures above highlight, you cannot afford to ignore them or relegate them to being a post-peak season afterthought.
In fact, get returns right and they can actually generate revenue.
So, the team at ClearCycle has set out the key ways you can optimise your returns process below.
Identify your key returns priorities
Not all returns are created equal. Depending on the diversity of your inventory, you may choose to prioritize some returns over others. Take stock (literally) of your inventory and identify those products which have a good profit margin and which are capable of being cycled back into your inventory in the event of them being returned.
You should ideally do this before you hit your Q1 returns peak.
Should you find that sufficient items within your inventory meet these criteria, then you’ll know that optimising your returns process will be a financially worthwhile endeavour.
Measure your returns in detail
You’ll also want to ensure you have sufficient visibility over your returns process. Putting in place adequate management and metrics are key at this stage.
You should manage your returns as closely as you do the rest of your processes and inventory.
Ensure that you collect plenty of data from your returns so that you can identify commonly returned items and the most common reasons for returns. Gathering this sort of data will help to implement ongoing improvements; these could be anything from working with suppliers to improve the quality of commonly returned items, to improving product descriptions for items that are incorrectly ordered on a regular basis.
You should consider a wide range of factors when you’re collecting returns data, including:
- How long does the end-to-end returns process take?
- What resources are involved in the returns process? (Ideally, you’ll be able to identify a cost-per-unit for returns).
- What categories, vendors, customers etc are responsible for the highest percentage of returns?
- How can your purchasing and inventory decisions be improved to reduce returns?
Putting in place ways of measuring key data points and then acting on the information gathered, will help you hone your returns process.
Calculate your returns cost
Once you’ve implemented sufficient ways of measuring returns data, you should be able to identify your returns processing costs. It should be possible to arrive at an average returns cost for your inventory.
By identifying your returns processing cost you’ll be able to make better decisions about future returns. For example, if a customer calls your customer service team to complain about a broken item that cost £5, and your returns processing cost is £8, it’s cheaper to send a replacement item (without requiring the original item to be returned).
Be transparent about your returns policy
If a consumer knows they can return an item, they’re more likely to make a purchase. Fact.
So, be transparent about your returns policy. Display it in easily accessible places; your website, within product packages, on the back of packing slips. Make sure that your social media team is answering questions about returns.
What’s more, set out your returns policy in plain English. Whilst it may be tempting to give it an ‘official’ tone by writing it in legalese, this’ll just put people off. Be clear about what people can and can’t return, and the terms of doing so, and you’ll increase your sales.
Provide consignment tracking for returns
Thanks to online retail giants such as Amazon, consumers are used to being able to track the progress of their items. They can see if their item has been dispatched, and when they’re likely to receive it.
Chances are, you offer an order tracking service too. But, can you say the same about your returns?
Customers that have returned an item are usually keen to know when their item has reached the retailer. They’re probably waiting on the refund so they can buy something else instead.
Whilst 97% of online retailers provide some form of consignment tracking (either directly or via a shipping partner), only 7% do the same for returned items!
If you want to make your returns process a competitive advantage, consider offering returns tracking for customers – it’ll make you stand out in a crowded market.
Offer free postage for returns
Deciding whether you should offer free postage for returns can be a big decision for many online retailers. After all, conventional wisdom suggests that if you offer free postage on returns, you’ll end up with more returns overall!
This isn’t necessarily true though. In fact, asking customers to pay the postage on returns can reduce the likelihood of repeat purchases – losing you money in the long run. A study by the JDA Software Group backs this up, with 62% of survey respondents expressing frustration when asked to pay for return postage.
The key benefit of offering free postage for returns is customer retention. Maintain the loyalty of that customer by offering free return postage and you could benefit from a lifetime of repeat purchases.
Tip – to help you make this decision, consider the following; free returns have become the standard. A National Retail Federation study found that 59% of retailers currently offer free postage on returns.
Include a return label with every order
If you do decide to take the plunge and offer free returns, then make it as easy as possible for the customer by including a return label with every order.
Not only will this make the customer’s life easier, it’ll make yours easier too. Why? Because you can ensure that returns are clearly labelled as such, so your returns processing team will be able to quickly and easily identify and process returns.
Tip – place codes on these return labels so you can identify the original purchase source (if you sell via multiple channels). This will speed up your returns process further.
If you effectively integrate all of these things into your returns process, you’ll quickly make your business stand out – especially in the eyes of the ever-more fickle online shopper. By getting returns right, you can create more return customers. Win, win!
There is, however, one final thing you should do to take your returns process to the next level…
Partner with a reverse logistics expert
As this article makes clear, returns are a complicated and tricky business – especially during your busiest time of the year.
If you’re an online retailer, then you should be spending your peak period doing what you do best – marketing and selling your products!
But, you can have it both; fantastic sales and an industry-leading returns process. How? By partnering with ClearCycle.
We are experts in reverse logistics, reCommerce and stock liquidation solutions. Get in contact today and find out how ClearCycle can transform your returns process.
Are you ready to revolutionise your returns experience? Then speak to ClearCycle now
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