For over 100 years returns have been a part of distance selling. But these days, strong competition and customer expectations requires retailers to focus on this area, increase customer service and ideally to evolve the returns process into a marketing tool.
Ecommerce returns can vary between 1% and 60% of units despatched depending on product, with apparel generating the highest percentages. Distance selling regulations are generous to consumers, who are permitted to change their minds after buying most items online as they haven’t had the luxury of seeing and touching the product as part of their decision-making process. For those of us involved in internet retailing, we need to take care of this customer as they have received an item which is in some way disappointing to them. Of course we also need to take care of our businesses by seeking ways to minimise the financial headaches brought on by returns, including extra logistics costs, transaction costs associated with a refund and additional marketing to resell the item.
Retailers and their logistics teams have focused on increasing sales by improving the customer experience of returns. From a logistics point of view, it is important to get the despatch documents right. Clear and reassuring instructions covering multiple options are now the norm, including returning any unwanted or faulty items in store, which, like a click-and-collect service for orders, offers the multichannel retailer an extra sales opportunity.
While this removes the initial cost of physically moving the product, the store may not be able to re-merchandise the item effectively, so it may still need to be returned to the distribution centre (DC). The logistics team must have the systems in place to manage this, particularly if the stock systems and supply chains are separate between stores and ecommerce. Many retailers, especially those selling large or luxury items, have concluded that consumers must be offered the option to have returns collected directly from their homes. However, drop off at a convenience store has also become an important addition to the usual post office route. Naturally retailers require the support of their logistics partners to facilitate these multichannel returns routes, much in the same way they require them for the original route to market. Recently we’ve seen innovation in the area of international returns, with companies such as WorldNet and Spring Global Mail facilitating consolidation, processing and delivery. Some larger etailers are even able to develop their own regional solutions with local returns processors, particularly in countries like the United States, where complicated federal laws and customs can make cross-border returns particularly troublesome.
Ecommerce operations have evolved beyond just collecting and returning unwanted goods to DCs to include how the goods are then processed. Retailers need to have clearly defined rules in place to ascertain whether customers can be refunded and the product can be made available for ordering again. This is particularly important in fashion, where multiple items are often purchased and then returned due to being the wrong size or colour. But what about clothes that have been worn – or lingerie or jewellery for piercings? Robust QA checking is imperative to ensure items aren’t tainted and can be re-merchandised and refunds processed as quickly as possible. What’s more labels will often need to be re-applied, new packaging provided and other light remedial work carried out to make items good. These activities can add significant costs to process but must be set against the cost of fraud and future sales.
Retailers have evolved dramatically in the past five to 10 years of ecommerce, from some companies trying to prevent returns at all costs (to customer service) to nowadays being open and transparent throughout the customer journey. It’s recognition that where the end user feels confidence in the returns process the increase in overall sales should outweigh the costs of processing and reselling returned items. Customers expect to be able to return purchases via the same array of order channels, and it is down to retailers and their logistics teams to facilitate this.
