GUEST COMMENT The returns opportunity

As brands expand their cross-border operations, they may see their returns costs escalate sharply. Jonathan Sheard, vice president, sales at ESW shows how partnering will give brands a returns management infrastructure and strategy based on detailed local knowledge to contain costs and build customer loyalty.

It is easy to make generalisations about the problem of returns, both the cost and the difficulties of reducing them, but the truth is shoppers in individual markets behave differently and have different expectations when it comes to making a return. Therefore, applying a standardised returns strategy in every territory is certain to lead to more returns, higher costs and lost sales, not to mention the inability to build long-term loyalty.

To better understand current consumer sentiment about shipping and returns, ESW surveyed 18,000 consumers in 18 countries, published in a report called Shipping and Returns: Leveraging Logistics to Unlock Global Loyalty.

The report showed there are many tools and tactics that brands can apply to the returns process that will boost customer satisfaction and loyalty, including clearly communicating all applicable costs, including taxes and duties, in each market.

In addition, the survey results showed that returns transparency is key to building trust with shoppers. In fact, customers should have a similar experience during the returns process as they do when receiving an order. Costs should be clearly displayed and tracking information should be provided in order to put customers at ease.

The research supports this view. 22% of respondents said they were more likely to buy cross-border if the brand’s website clearly sets out its returns policy. Furthermore, 27% of respondents said they buy locally (instead of cross-border) because they are concerned about returns and refund policies, while a quarter of respondents (25%) said that they buy locally because they are worried about the cost of returning an item internationally.

More and more brands recognise that building trust from day one is critical and are choosing to work with partners that have in-market experience and technical capabilities to provide localisation which builds that trust. This includes implementing a flexible, transparent return process including the ability for customers to easily initiate a return online and options for returning items via post or at a physical location.

The cost of processing returns continues to rise for global brands. This has led to a debate over whether brands should charge shoppers for returns and, if so, how much? Again, the research shows the way ahead and demonstrates the importance of localisation.

The survey analysis looked at age groups overall as well as country by country. 58% of Gen Z said they would make a purchase even if they knew there was a nominal cost to return it, but this fell to 34% of Boomers. Country by country, the survey found that 76% of respondents in India said they would make a purchase even if they knew there was a nominal cost to return it, a figure that fell to 55% in Switzerland. And yet, the Swiss demonstrated the highest propensity to pay a return shipping fee, 41% against 28% in the UK.

These findings demonstrate how important it is that brands know their customers and their preferences, as it enables brands to implement the best policies in each country. For instance, offering a membership fee that includes free returns was a popular option in India with 44% of respondents saying it was an appealing option, but only 14% of respondents in Germany agreed.

It is fair to say that these findings also support the need for brands to offer a range of returns options, including courier pick up, return to store, or return to a drop off location. Brands should implement the returns options that best suit the shoppers in each market and ensure that customers receive their refunds or replacement items in a timely manner. 

Working with a partner will help brands build the infrastructure and strategy that works for them and is best positioned to meet consumer expectations. In addition, partners can provide performance data and analytics to support constant improvement.

This approach shifts the focus from returns being regarded simply as a burden to an opportunity to improve customer satisfaction and build loyalty. By localising returns to each market, brands build a structure that protects margins and delights customers in each country.

By shifting the thinking on returns from a burden to an essential part of the customer experience, brands can strategically leverage returns to encourage repeat purchases and increase loyalty.

Access the full report, Shipping and Returns: Leveraging Logistics to Unlock Global Loyalty, here.

Jonathan Sheard, vice president, sales at ESW