Customer returns don’t have to be the Achillies’ heel of retail balance sheets and supply chains. With the right strategy and processes, the practice of products being sent back can create revenue opportunities and build brand loyalty. Speed is critical to this.
The need for speed
A recent YouGov survey of 2,000 online shoppers, commissioned on behalf of ASC, found that 53% of shoppers would not spend again with a retailer, if they were slow to refund their money after returning a product.
Survey data revealed that shoppers expect their refund within 2-3 days of sending an item back, with a quarter (25%) believing that waiting up to one week for a refund is too long. A further 27% thought 10 days was too long for a refund, while 23% think waiting two weeks for their money back is unacceptable.
As well as turning their backs on retailers, the survey shows shoppers frustrated by slow refunds won’t go quietly. Nearly a third (32%) said they’d tell family and friends not to shop with a retailer because of delays getting their money back, while 27% said they’d leave a negative review online. A fifth (20%) said they make an official complaint.
Quite simply, retailers need slick reverse logistics to avoid slow returns and refunds from negatively impacting sales and brand reputations. Returned items need to be quickly quality checked and verified to authorise a refund. The importance of this is further crystalised by data highlighting two thirds of shoppers (67%) would likely spend their refund with the same retailer, if they get their money back within 2-3 days of making a return.
Five focus areas for faster returns and refunds
Improving the speed and efficiency of returns requires action in five key areas.
1) Shift in strategy. Understandably, returns have long proved a bone of contention for retailers. Items being sent back can quickly erode margins, cause stock availability issues and risk waste. Reverse logistics also demand additional time and resource. These factors have led to ‘cost’ dominating returns management strategies. An important first step for retailers is to shift the emphasis towards ‘time’ and prioritise goals and decision making based on improving the speed and timeliness of reverse logistics. This will create a new approach to returns, which can also unlock efficiencies.
2) Make returns a standalone channel. Retailers need an end-to-end, fully integrated supply chain management strategy. This needs to have the ability and capacity to manage returns in much the same way that outbound stock / sales are prioritised and handled. Supply chain software, such as ASC’s Vector, which enables the full integration of sales channels and third parties (e.g. final mile delivery companies that collect returns or collection points such as a Post Office) presents the opportunity for returns to be logged in the system as soon as they leave a customer’s possession. This can accelerate the processing of a refund and creates a flow of data that boosts visibility.
3) Build connectivity and visibility. A rich flow of accurate and accessible data is critical for tracking the status of returned items. It creates visibility of any potential issues and informs up-to-date reporting that can be used to speed-up the authorisation of a refund. As soon as the condition of a returned item is verified, an alert can be triggered to green light the refund process and to notify a customer to keep them updated and manage their expectations.
Reliable returns data can also inform analytics that identifies and pre-empts any potential problems or areas of concern. For example, serial returners can be identified and flagged, and extra quality control measures implemented that are efficient and effective. Similarly, data analytics may identify product faults, which helps expediate quality checks and overall returns processes.
4) Streamline salvaging. Quick and effective returns management must be built on robust quality control inspections. A crucial part of this involves clearly defined gradings for salvaging to avoid excessive deliberation about the condition of returned goods and where they are directed to.
5) Ensure repair and restoration is at the heart of returns. Clearly defined salvage grading creates a blueprint for repair and restoration processes that save time and minimise waste. Retailers should ensure supply chain partners have the capabilities to enhance the circularity of products – an area of growing demand, and potential skills shortages, as the popularity of recommerce grows.
In addition to rapid refunds, faster and more efficient returns processing can reduce the time that stock spends dwelling in reverse logistics. Products can re-enter circulation more quickly to maximise sales opportunities and reduce the threat of asset depreciation.
Speed and quality control are two critical parts of reverse logistics, which require data-rich visibility and robust salvaging processes. Achieving success in each of these areas will help unlock rapid refunds, turning returns into opportunities that encourage customers to shop again. A returned product can become a profitable becomes part of the shopping experience, rather than marking the end of a customer’s purchasing journey with a retailer.
Click here for more information about how ASC can optimise the speed of returns or email: enquiries@advancedsupplychain.com
Stuart Greenfield, Sales Director, Advanced Supply Chain (ASC)
