In today’s economic climate, more and more brands are recognising the potential of cross-border selling as a strategy to expand sales. In recent years, cross-border sales have been growing at a faster pace than domestic sales, with brands in China and the EMEA region (Europe, the Middle East, and Africa) showing particular interest in expanding their reach, writes Sylvia Ng, chief executive officer, ReturnBear.
When it comes to expansion, the North American market is a natural one to consider and success stories abound. Nearly a third of all U.S. digital buyers will make overseas purchases online in 2024, as inflation continues to add new impetus for buyers to search for lower prices. Temu, an online shopping site owned by PDD Holdings in China, quickly became the most downloaded app in both the U.S. and in Canada when it launched in North America last year. In Canada, international brands aren’t just showing up online, but they’re also showing up in malls; the brands that have opened physical shops here last year include Psycho Bunny, Vilebrequin, All Birds and Benkei Hime.
When brands decide to expand to North America, energy is focused on the things that will drive sales: finding target audiences, pricing strategies, language localization, payment preferences and addressing cultural differences. However, there is one crucial aspect they often overlook – returns.
The Pitfall of Ignoring Returns
Many brands recognise that returns are no longer a minor concern. With the ongoing trend of bracket buying, returns can account for as much as 25 to 30% of sales. Managing returns is therefore crucial to making a profit. However, still too many retailers think of returns as only a cost to manage, and not a driver of growth and revenue. International customers, especially those from North America, prioritise hassle-free returns when making cross-border purchases. Consider these facts: 50% of online shoppers have abandoned their cart because there wasn’t a convenient return method available, and 88% of shoppers are more likely to shop at an online store that offers free returns, with immediate refunds and no packaging required.. Neglecting returns not only increases costs, but deters potential buyers. A good returns process isn’t something that you set up after you enter a market and make sales; it’s something that you need to set up beforehand to increase your sales at launch.
When brands ignore returns, they expose themselves to several pitfalls that can hinder their sales and growth potential:
Dissatisfied Customers: Without a well-defined return policy, buyers will hesitate to make purchases. Studies show that 67% of online shoppers check the return policy before making a purchase decision. If buyers perceive the return process as inconvenient or unreliable, they are more likely to abandon their shopping carts or seek alternatives.
Negative Reviews and Reputation Damage: Poor return experiences can lead to negative reviews, damaging a brand’s reputation. Online platforms and review sites empower customers to share their experiences, and 88% of consumers consider online reviews as trustworthy as personal recommendations. Negative feedback related to returns can significantly impact a retailer’s credibility and deter potential customers.
Financial Losses: Inefficient return logistics and inadequate policies can result in increased costs for brands. These costs include return shipping, restocking, refurbishing, and potential inventory losses. Unfortunately many brands still lack visibility and tracking into returns, and so these costs remain hidden. Without effective return and analytics management, brands may find themselves operating at a financial disadvantage.
Limited Market Reach: Ignoring returns can restrict a brand’s ability to expand into new markets. Many local marketplaces require that you have a domestic address for returns. At ReturnBear we’ve come across our fair share of brands who simply borrow a friend’s address for returns, but not only is that solution not scalable, but buyers expect better of the brands that they buy from. Sustainable practices, including eco-friendly returns and recycling programs, have become increasingly important to consumers in recent years. Many consumers are becoming more conscious of the environmental impact of their purchases and expect brands to take responsibility for sustainable practices, including how they handle returns and product disposal.
The bottom line: by neglecting returns, brands miss out on a significant opportunity to capture the trust and loyalty of global customers, and risk financial losses.
Setting Up Returns for Success: Steps for Expanding from Europe to North America
To ensure a seamless cross-border selling experience and to maximise sales potential when expanding from Europe to North America, it is key to establish a robust returns process from the outset. Here are some steps that I’d recommend to brands looking to expand internationally:
Research Local Regulations: Familiarise yourself with the specific return regulations and requirements in North America for your product categories. Understanding the legal framework will help you establish compliant and customer-friendly return policies.
Clear Return Policy: Develop a transparent return policy that clearly communicates the process, timeframe and conditions for returns. Make it easily accessible on your website and ensure it is tailored for your North American customers. Remember that Canada is a bilingual country with both English and French as official languages. Many American states have Spanish speaking populations, and buyers generally expect more lenient return policies during peak holiday buying times like Black Friday and Christmas. For more tips, check out this Ultimate Guide to Return Policies that dives into the differences into what you’ll what to consider between Canadian and U.S. return policies.
Convenient Return Options: Offer multiple return options to accommodate diverse customer preferences. This can include prepaid return labels, local drop-off points or carrier pickup services. At ReturnBear, we see 60 to 90% of consumers choosing drop-offs over mail-ins, depending on the brand’s buyer demographic. We also see that brands can retain as much as 70% of their revenue by offering store credit and exchange options as default over refund. By providing convenience, you enhance the customer experience and encourage repeat purchases.
Centralised Return Management: Streamline your return processes by implementing a centralised system that consolidates returns from different marketplaces and channels. This centralised approach allows for better tracking, efficient processing and consistent customer experience regardless of the selling platform. Standardise your return policies and return options across as many channels as possible to ensure a consistent brand experience for your buyers. Consider using technology integrations such as ReturnBear that can help automate return handling, synchronise inventory updates, and facilitate seamless communication with customers.
Efficient Return Logistics: Partner with reliable logistics and transportation providers to optimise return shipping processes. Streamline the return handling, including labelling, tracking, and warehouse management, to minimise costs and ensure prompt refunds or exchanges for customers.
Data and Analytics: Utilise return data and analytics to gain insights into customer behaviour, product quality, and potential areas for improvement. This information can guide decision-making, such as adjusting product descriptions, improving packaging, or addressing recurring manufacturing issues.
Returns are a critical aspect of cross-border selling that brands should not overlook. Building a solid returns framework from the beginning is essential for successful expansion from Europe to North America. By understanding the significance of returns, implementing a clear return policy, and establishing efficient logistics, brands can enhance customer satisfaction, reduce costs, and unlock the full potential of cross-border sales.
Sylvia Ng, chief executive officer, ReturnBear