It’s always satisfying to watch freshly-packed orders be dispatched from your warehouse. But do you think about what happens when some of them come back? According to the latest stats, it could be as high as 30%.
Although high return rates in ecommerce are nothing new, it’s never been more important to manage them effectively. Why? Because reverse logistics can be the difference between a customer choosing to make a repeat purchase – or going off to one of your competitors.
However, many brands end up with a cumbersome returns process due to making one or more common mistakes in reverse logistics. We’re going to look at some of these errors, and what your business should be doing instead to strengthen your returns management.
Most online retailers have some form of returns policy since it’s a requirement in many countries’ consumer protection laws. However, there’s a big difference between a bare-bones policy that ticks all the legal boxes and one that protects your products.
If you aren’t able to resell returned products in a timely manner due to damage or other defects, this has a huge impact on your revenue due to the accumulated cost of repairs or reticketing. Because this adds considerable time to returns processing, this could also delay your customers receiving refunds.
What to do instead: It’s important that your returns policy stipulates the condition that items need to be returned to receive a refund. This includes products still having labels attached, still in their original packaging, and being unworn (in the case of apparel).
For more tips, read our guide on how to write an ecommerce returns policy.
With sky-high return rates in ecommerce, it’s understandable that a lot of retailers really don’t like returns. After all, it’s pretty disheartening to watch orders come back into the warehouse almost as soon as they left it.
This frustration drives many retailers to add friction to the customer experience by discouraging customers from returning items – meaning they can hold onto a larger proportion of sales. This can take the form of narrow returns windows, lengthy paperwork, and even store credit-only refunds.
Because consumers have grown accustomed to hassle-free ecommerce returns, these efforts can backfire by pushing customers away from your business. This causes your churn rate to increase, as well as your acquisition costs.
What to do instead: Characterizing returns solely as a loss of revenue minimizes the role that generous returns policies play in attracting customers to repeat purchase; 92% of customers will shop with the same brand if the returns process is straightforward to navigate.
In sum, online returns culture presents a valuable opportunity to build stronger relationships with your customers through quality customer care and more flexible, customer-centered returns management that fosters brand loyalty.
For more on this topic, check out our full guide on why it’s time for retailers to embrace returns.
Due to the likes of Amazon Prime and eBay, free shipping has become a widespread expectation in ecommerce. As a result, it’s become a necessary offering for smaller retailers if they want to be seen as a viable alternative.
However, there’s considerable pressure to remove friction from the returns experience by also shouldering return shipping. While this will certainly please your customers, it can also result in escalating costs that make some sales unprofitable. For example, if you have a threshold for free shipping, customers may choose to buy additional items to qualify – only to return the unwanted items for free.
What to do instead: If you can’t rely on large order volumes to avoid making losses, weigh up whether there’s a way for you to offer both free shipping and free returns without eroding your profit margins. For example, you can elect to use economy shipping methods to keep costs down or suspend these offerings during peak periods where shipping is expensive, such as the holiday season.
It’s also worth noting that not offering free shipping could actually lower returns by reducing the number of impulse purchases that your customers make, which also takes the pressure off returns processing.
It’s impossible to deal with returns effectively if you don’t know why they’re happening. Returns data can tell you a lot about current returns trends in your business. For example, are there certain SKUs that are seeing persistently high returns? If so, it’s important to find out if this is something to do with how the product is being displayed online.
But if you aren’t making the effort to ask customers why they’re returning an item, you’re going to miss out on some valuable insights that could enable you to make improvements. In short, your business is left completely in the dark over consumer behavior, which makes it difficult to find meaningful ways to improve the customer experience.
What to do instead: If you want to lower return rates in a constructive way, you can add an online form to the returns process where customers need to state their reason for the return and provide any additional comments. You can then use this information in real-time to make the shopping journey more seamless for your customers.
For example, you might need to consider improving image quality if consumers keep flagging ‘wrong color’ as the reason for returning. Likewise, if accessories consistently see a lot of returns because customers can’t try ahead of time, why not think about adding a try-on AR filter like NARS Cosmetics?
Returns management is often a tricky business. But you can improve your reverse logistics by avoiding these most common mistakes that often result in increased costs or unhappy customers – neither of which are good for retailers. By implementing the strategies discussed above, you can avoid the pitfalls of returns while also fostering a more loyal and satisfied customer base.
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