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The problem with returns

Handling product returns is an ever-growing pain point in eCommerce. Last year, IMRG reported that 23% of orders are eventually sent back- the UK’s highest figure for returns yet. The cost of processing such a high volume is further intensified by the pressure to meet and maintain customer expectation: 60% of shoppers now see returns charges as an absolute deal breaker yet absorbing these costs themselves in an already-competitive market can quickly put the margins of online retailers in troubled waters.

Why bother?

There are some advantages to adopting a well-oiled returns handling process. Offering their customers free shipping and returns has been proven to provide the following benefits for eCommerce businesses:

  • Gross Merchandise Value and Average Order Value is sure to increase.
  • The building of brand loyalty and subsequent repeat custom.
  • Customer ratings and online reviews.
  • If speed thrills, friction kills

Most customers expect retailers to process their returns in under a week. With 61% of retailers believing that logistics, operations, supply chain and warehousing teams are responsible for speed of returns to customers, it is therefore ideal to outsource through a provider with automated fulfilment software. This will ensure returned items are processed, back into the main inventory and out for sale as soon as possible.

If you can, locate a 3PL provider that have KPIs on returns as well as order dispatch rates- for example, here at fulfilmentcrowd, we have a KPI of 24 working hours (3 working days) for processing returned stock. This industry-leading service level, while great for putting your own mind at rest, also allows you to provide your customer with an estimated refund date, making for great customer service.

Note: If you’re handling returns on eBay, the retailer must only pay for the return if the item(s) in question is faulty. If the customer has simply changed their mind on an order, they must fulfil the cost of that return themselves. eBay also run a tight ship for the speed of returns processing, requesting that buyers are refunded within 6 days.

Create a simple, trustworthy and generous returns policy

Put yourself in your customer’s shoes. Most returns policies look like the terms and conditions of a contract, whereas others don’t display an easily-identifiable procedure for returns on their site at all. The easier it is for consumers to understand your returns policy, the more likely they are to trust the brand and return time and time again.

You should consider including a free returns label with each order, depending the average number of returns your business receives. Another top tip is to increase your returns window to 30 days, as it’s been proven to increase placed orders by 57%- a figure not to be sniffed at.

Additionally, if you operate across online marketplaces like Amazon or eBay as well as your own website, brand replication is crucial regarding your returns policy. For SME’s trying to expand internationally, we recommend making your returns and delivery procedure equal, if not better for consumers buying directly from your website.

Have your own back

Within all this optimisation of the consumer experience, there’s no harm in protecting your own margins in the process. After all, there’s no point in maximising sales by offering an amazing returns policy if the business simply will not profit.

You must ultimately measure the cost of a competitive returns offering against the subsequent increase in orders placed to make an important decision: is it worth it?

A top tip to protect your profit margins may be to create a set of safeguarding rules, for example, by making heavily-discounted items (especially popular over the festive period) non-refundable or exchangeable only.  

Can the problem of returns ever be solved?

Unfortunately, the nature of making purchases online based on images rather than trying and testing the tangible product itself means that returns are bound to be an issue across all sectors of online retail.

eCommerce giants, such as ASOS and now Amazon, offer a try-before-you-buy scheme in an effort to simplify the online buying process and eliminate the financial frustrations associated with returns. Policies like this are sure to become ever-more prominent in 2019. Online retailers: watch this space.

Our automated  order processing platform integrates with multiple marketplaces, providing you with a portal that enables complete visibility and allows you to track all returns in real-time.

 If you’re an online retailer struggling to optimise your dispatch and returns performance, then allow us to help by getting in touch. But don’t just take our word for it: listen to what our client, Calla Shoes has to say about our returns management capacities.

by Liz Churm on 03/12/2018

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