Returns are a growing concern for ecommerce merchants. An increasing percentage of consumers are returning goods, and they expect a swift and hassle-free service. Do they get it? In many cases, no.
Despite becoming a standard component of the online shopping experience for many customers, returns remain an afterthought for a lot of businesses. It means extra costs, a poor service and less sales in the long run. So, what’s the solution?
Why are returns increasingly important? In the UK, as well as many other developed economies, online sales have grown rapidly and consequently, so have returns. It’s a logical result of ecommerce. Consequently, we have seen the development of a ‘returns culture’ among millennials. Give people an easy and convenient way to buy and they will use it, but be prepared for what happens if their product isn’t what they wanted, needed or expected. Returns are now at such volumes, consumers have become the largest supplier for many omnichannel retailers, in our experience few have yet to tackle returns on this basis.
One common tactic, for instance, is to buy the same item of clothing in two sizes, with the intention to return whichever one doesn’t fit. This is the virtual version of the changing room – and it’s just one example of the savvier approach people are taking to online shopping. However, knowing in advance that they will need to return their product, consumers want and expect a simple and reliable returns policy. For retailers, this makes it even more important to have an effective strategy in place. Nearly half shoppers questioned in high street research confirmed that by standardising apparel and shoe sizes, they believed that it would reduce the need to ‘over buy’ and make the shopping experience more enjoyable.
Returns as the edge
Because of the new-found desirability of a stress-free return process, they have become something of a selling point. When consumers are choosing between two similar stores, an effective returns policy could be the difference. In fact, research suggests that 83% of customers would shop more at a particular retailer if the returns process is easy.
This is even more prominent at peak times such as Christmas. It’s estimated that 30 million unwanted products are returned over the festive period. That’s around one in five products being sent back, with the first Thursday after Christmas the busiest day. Failure to process these returns quickly will no doubt have an impact on future sales pricing; the longer it takes to process an item, the greater chance the price will have further dropped before the item can be offered for sale again. Speed can also have a negative effect on the condition of items. In the high demand, fast fashion industry, this speed of turnaround can mean that there is no time to assess condition, manage any repairs or spot clean items. Clothes are more likely going to be sent out in poor condition, or simply jobbed off for ease of process.
Coping with demand
Clearly there is a need for an efficient returns strategy– but what exactly does that mean? Retailers need to consider ways to make returns easier for themselves. Incentivising in-store returns is one option. For merchants that operate both in store and online, could a 5% discount persuade customers to do the ‘leg work’ of returns??
Clarity is also essential – for the business as well as consumers. Customer service is an integral part of the returns process. Purchasers need to know how to return their product, how long it will take and even the progress of their return. This is made more complex when information isn’t readily available, as businesses will need to spend more time, effort and money on customer service. Returns FAQs, live chats, detailed product descriptions and automated returns systems are both ways of reducing the administrative burden.
Staying in control of returns management
When it comes to actually managing their reverse logistics strategy, businesses need to be in control and have visibility of the entire supply chain; monitoring stock at all times and effectively managing their transport network. It is important to recognise that even with improved online methods, there will still be products to be managed, processed and put back into stock as quickly as possible. Understandably, this can be more difficult for smaller retailers compared to larger, more developed counterparts – especially at peak times like Christmas.
At Bis Henderson Consulting, we can provide strategic logistics insight to assist with reverse logistics and returns management. We see our role as not only improving every step of the returned goods’ journey, but seeing the end to end process through the customer’s eyes.Retailers are now continually trying to reduce returns and reduce cost of processing by looking at early root causes and identifying any buying & merchandising changes required. We have seen an increase in the optimisation, standardisation, mechanisation or elimination of bulky processes, and emphasis on investing in customer experience.
With this combined perspective, we help create the best possible experience for the businesses and their customers in several ways:
- Identifying more accurate returns rates
- Assessing the gross margin impact of forecast vs true returns rates
- Calculating and improving product profitability
- Reducing excess stock and or enhancing availability
- Improving customer experiences and customer loyalty
Optimising your returns
Put simply, we help businesses process returns and refunds more quickly, building consumer loyalty and as a result encouraging future orders. The end game of our specialist returns team is to minimise the cost of returns and maximise the recovery value of the returned product. We believe getting the processes around returns right can drive faster decisions on end of season / residual lines, save costs and improve product yield.
As specialists in Supply Chain Consulting and Logistics Consulting, with first-hand operational experience, we’ve built a solid reputation for delivering transformative change and measurable results for our clients. If you’re looking to optimise your returns, be sure to get in touch with our consulting team for a chat.