If you’re an e-commerce retailer, you know returns happen. And, while no business wants to see products bouncing back into the warehouse, it is inevitable. The average rate of return in e-commerce is between 20% and 30%. There is good news in returns. With the proper returns strategy, you can improve customer satisfaction.
In our 2023 E-commerce Consumer Study, returns was one of the biggest topics. In fact 56% of online shoppers said return policies affect if they will make a purchase from a company or not. That’s why it’s imperative for businesses to have a solid returns strategy to avoid major logistical problems.
In this article, we’re going to take a look at why returns management matters, and how logistics partners can coordinate a more streamlined, efficient returns process for your business.
Why do customers return items?
The reasons for customer returns are varied and wide-ranging. But in many cases, it has nothing to do with the retailer or product at all. While ‘damaged product’, ‘wrong items’ and ‘not matching the image/description’ are common reasons, these are outstripped by the 41% of customers who buy items with the intent of returning them.
The e-commerce model is one where returns are an integral strategy to drive sales; when consumers don’t have the opportunity to try products ahead of purchasing, the ability to easily return or exchange products becomes a necessity.
As result, it’s simply become a part of the culture of online shopping. When consumers purchase an item, they do so with the understanding that it might not be right for their needs. This is why return rates in e-commerce continue to out-paces brick and mortar.
For this reason, merchants can’t fall into the trap of approaching customer returns as a problem that needs ‘fixing’. A business can reduce return rates by providing better product descriptions or using more protective packaging. But, making returns policies more complex or restrictive is only going to backfire on your business.
Returns management: The make or break for success in e-commerce
Increasingly, success as an e-commerce business hinges on your ability to manage returns quickly and effectively. For many consumers, returns policies are what determine who they choose to purchase from. According to Global Web Index, almost 80% of consumers in the US will check a retailer’s website for details about returns before purchasing. Furthermore, 63% say that they would refuse to buy from a retailer if they couldn’t find a return policy online.
Why? Because online shopping is ultimately about convenience and choice – and a flexible returns policy is one of the biggest signifiers of this. In a channel where consumers can be notoriously difficult to convert into repeat business, good returns management is one of the most successful retainment strategies available to e-commerce businesses.
Surveys show that customers will go back to merchants who offered them an easy returns process – and they do so in huge numbers. A massive 92% of consumers will shop again with you if they had a positive returns experience!
In sum, returns management isn’t just being organized and efficient; it’s about fostering customer loyalty and giving yourself an edge within an intensely competitive marketplace.
Improving your Returns Management
Improving your e-commerce returns management can significantly enhance customer satisfaction and streamline your operations. Here are some strategies to consider:
Transparent Return Policy: Make your return policy clear and easily accessible on your website. Ensure it's written in plain language and covers important aspects like time limits, condition of returned items, and refund methods.
Easy Return Process: Simplify the return process for customers by providing pre-paid return labels, clear instructions, and multiple return options (mail, drop-off, etc.). Consider offering a streamlined online return portal where customers can initiate and track returns.
Efficient Processing: Designate a specific area or team to handle returns efficiently. Implement barcode or QR code scanning systems to expedite processing and reduce errors. Aim for quick turnaround times to process returns and issue refunds or exchanges promptly.
Quality Checks: Inspect returned items promptly to assess their condition. Determine whether they can be restocked, refurbished, or need to be disposed of. This step helps minimize losses and ensures only quality products are resold.
Data Analysis: Analyze return data regularly to identify trends and root causes of returns. Look for patterns such as common reasons for returns, defective products, or issues with sizing or product descriptions. Use this information to make informed decisions about product selection, descriptions, and quality control.
Customer Feedback: Encourage customers to provide feedback on their return experience. Use surveys or follow-up emails to gather insights into their reasons for returning items and suggestions for improvement. Actively address any recurring issues to enhance customer satisfaction.
Optimized Inventory Management: Maintain accurate inventory records to prevent overselling and ensure stock availability for exchanges. Implement inventory management software that integrates with your e-commerce platform to track returns and update inventory levels in real-time.
Reduce Return Rates: Take proactive steps to reduce return rates by providing detailed product descriptions, accurate sizing guides, high-quality images, and customer reviews. Consider offering virtual try-on tools or product customization options to minimize the likelihood of returns due to inaccurate expectations.
Product Packaging: Use durable and eco-friendly packaging materials that protect products during shipping and are easy to reuse for returns. Clear instructions on how to repack items can also help minimize damage and streamline the return process.
Continuous Improvement: Regularly review and refine your returns management process based on feedback, data analysis, and industry best practices. Stay informed about emerging technologies and trends in e-commerce returns management to remain competitive and adapt to changing customer expectations.
By implementing these strategies, you can optimize your e-commerce returns management process to enhance customer satisfaction, reduce costs, and improve overall efficiency.
The good thing is you don’t have to tackle returns on your own. An experienced third-party logistics (3PL) provide with e-commerce fulfillment solutions can help.
How a logistics partner can help
Scalability
One of the biggest difficulties with customer returns is that volumes don’t remain stable throughout the year. Every merchant knows that they will see a huge surge in the aftermath of the holiday season – meaning that your returns system needs to be able to withstand these seasonal ebbs and flows.
For many businesses, managing a logistics operation that requires rapid scaling is immensely difficult. With their sizeable resources, fulfillment providers are much better placed to manage fluctuations in staffing and required storage space.
Automation
No matter how efficient your system is, returns can be incredibly time-consuming to process. Moreover, complicated workflows can leave you prone to errors that slow down the entire process – which is especially troublesome when consumers expect speedy returns.
Rapidly growing e-commerce operations require cost-effective solutions to manage both order fulfillment and reverse logistics. The fast pace of technological advancement has enabled fulfillment providers to bring sophisticated automation into its workflows, dramatically speeding up what used to be a highly manual returns process. This helps to control fluctuating labor costs and eliminate costly errors.
Affordability
As well as fast returns, consumers are showing an increasing expectation for free return shipping options as a part of the process. According to Narvar, 74% won’t make a purchase if they have to pay for return shipping.
Having a strong returns management process in e-commerce fulfillment is crucial. It directly impacts customer satisfaction and loyalty. A seamless and hassle-free return experience enhances trust and confidence in your brand, leading to repeat purchases and positive word-of-mouth referrals. Additionally, efficient returns management helps minimize the financial impact of returns by reducing associated costs such as restocking, refurbishing, or disposal.
