2020 has seen a profound change in retail ecommerce. 87% of Britons have made purchases online this year** as the global pandemic and subsequent lockdown saw online sales soar to a ten year high. Despite some negative forecasts for the economy, ecommerce sales look set to remain strong. Many are now of the view that the pandemic has changed consumer shopping habits for good and as sales increase, it means one thing is certain - returns are set to rise.
The Operational Headache of Returns for Retailers
Returns cost retailers a staggering £60bn per year.* Repackaging and reshipping items, as well as handling any damaged goods are just a few of the problems that returns present retailers. Add into the mix the lack of visibility around returns, and it quickly becomes clear why they are such an operational headache. Not knowing what is being returned, why, or when it is expected to arrive means retailers are often left playing ‘catch up’ leading to big delays in the supply chain.
With peak season approaching and the effects of the pandemic still lingering, retailers must act quickly to ensure they have a watertight returns process in place. Failure to do so could be very damaging, with some suggesting that up to a third of retailers margins could be lost if the process is neglected.*
Remove Sales Barriers by Prioritising Returns
Today’s shopper now expects the quality of returns service to match the delivery - both should work hand in hand. Despite this only half of customers are happy with their returns service.* This is very concerning, as second rate returns have the potential to drive away sales before the customer has completed the purchase. In fact, as many as 1 in 5 customers abandon their basket if they aren’t convinced by the returns policy.*
It will come as no surprise that convenience and communication are key for customers when it comes to returns. Should they need to return an item, they want to know that they have a range of convenient options available, and that they will receive updates as to the whereabouts of their parcel and refund.
Diversifying across a range of carriers and drop-off locations is therefore essential in providing the range of services customers require. In addition to this, retailers should also consider implementing returns portal technology as part of their strategy. Doing so will mean customers can select their preferred option and track their item all from one place, giving them that added reassurance that their return has arrived safely and a refund is on the way. This will lessen the time spent handling queries and help increase customer satisfaction, meaning that first time customers may become regular customers.
Anticipating Customer Behaviour to Streamline Your Supply Chain
In the past, complex returns logistics have been used as a barrier by retailers to prevent returns from occurring in the first place. This is now considered a dangerous approach due to the rise in shoppers who deliberately over-order items with the intention of making a return. This habit is most commonplace in fashion with shoppers ordering the same item in multiple sizes so they can try them on before returning the ones they don’t want. 35% of all consumers regularly shop this way and that figure increases to 45% amongst younger shoppers.*
Integrating data capture as part of your returns strategy will help you to anticipate customer behaviour. Having a better handle on what is being returned and why means you can anticipate the orders that you know are going to produce returns. Actively encouraging these consumers to make their return as early as possible will help you ensure the stock is back out on sale promptly. This will not only help increase revenue through additional sales and reducing waste, but will also help ensure a quicker refund for the consumer. A win-win for both parties.
Returns Which Are Suitable for International Markets
International returns create an even bigger problem for retailers. Services and consumer expectations vary country to country, so retailers must take the time to understand individual international markets and tailor their approach accordingly. Germany, for example, has a real ‘returns culture’ seeing up to 70% of all fashion purchases returned. Spain and China are particularly sensitive to returns, and are most likely to abandon the purchase if they are unsure about the returns process.*
Payment of duties and taxes, however, are the biggest headache for retailers. Whilst duties are paid for when the product goes directly to the consumer, this isn’t the case for the return leg. Not having the right documentation to prove that duties have been paid means the retailer risks being fined. For those taking their first steps into the international market, it can be easy to be caught out and any hefty, unexpected costs could be very damaging to those operating on tight margins.
Implementing the right technology will mean you can generate the correct returns documentation and corresponding returns label instantly, meaning customers and retailers can both be assured that neither will face unexpected fees or charges.
Providing Returns Excellence Leads To Returning Customers
The evidence is clear, returns matter to customers. If returns are neglected, the damage on the bottom line could be huge. Retailers must therefore treat deliveries and returns as one seamless transaction by making returns an integrated, branded part of the online shopping experience. Doing so will lessen the time spent managing queries whilst also giving customers the visibility and reassurance they desire.
Customer experience must be balanced with cost and operational impact. Widening the range of carrier services will provide choice for your customers and will ensure you have additional contingencies in place should any problems arise. Consolidating all this under one affordable cost by partnering with a multi-carrier expert would then alleviate the financial and operational pressure of dealing with multiple carriers by doing so on your behalf and providing you access to the most competitive rates.
All of this will mean you can keep costs down whilst improving sales. Effective management of returns can improve customer profitability by almost a third* and is vital to winning new customers. 92% of shoppers who have had a good returns experience go on to make repeat purchases too,* so get returns right, and you could turn that new customer into a loyal customer.
*IMRG returns Review 2020
Bobbie Ttooulis is executive director of Global Freight Solutions, a UK-based multi-carrier shipping and e-commerce delivery company.