Returns aren’t just lost sales, they put customer relationships and inventory investment at risk unless managed accurately. They are an important part of the inventory and should be optimized to promote healthy cash flow. Returns denote friction in the shopping experience and present an opportunity for brands to convert disappointed customers into lifetime buyers.
E-commerce returns vary between industries, often ranging between 15% – 40%; the lowest being for tech accessories and the highest for clothing. Online sales are expected to reach 21.8% of all retail sales by 2024, and considering nearly a third of all products end up being returned to the retailer, the need for controlling it is now, more than ever. It is time to scrutinize the reasons by using smart technologies and execute healthy practices to treat the fair, the flawed, and the fouled returns in the right fashion for higher customer satisfaction.
Fair returns highlight loopholes in processes and help improve product quality and customer service.
The damaged, faulty items are extremely harmful to business, and cause huge dents in profits. They are controllable returns that convey where the supplier or retailer went wrong. It could be:
- Poor packaging and usage of old unfit boxes or fewer packing materials to cut costs.
- Courier mishandling and missing important instructions in the rush to expedite deliveries. E.g. fragile packages kept beneath heavy parcels.
- Improper packaging, making items susceptible to damage due to adverse weather conditions like heat, humidity, snow, etc.
- Poor warehousing facility or inadequate location that is prone to theft, infestation or natural disasters like floods and tornadoes.
- Bad rugged roads or unfit lorries for last-mile deliveries damaged boxes en route.
- Human errors in packaging or sorting items leading to accidents.
These returns are very costly and must be addressed urgently. They waste resources, time, and effort, loads of dollars on marketing and logistics, and bring disgruntled customers.
Flawed returns are defective items that lose the opportunity to sell at full price due to an in-built fault.
Defective, refurbishable items can be mended but their chances of being as good as new are not guaranteed. These are also controllable as the defects may have been overlooked by the supplier or manufacturer, e.g. quality or manufacturing glitch, or caused due to mishandling by the retailer. If the defects cannot be restored, retailers have an option to sell them in the secondary market at a discounted price. Considering many brands and customers are choosing sustainable retailing, there are separate sites where refurbished items can be bought and sold, e.g. eBay Certified refurbished, Amazon renewed, thredUp, etc. Defective items have now become a part of regular trading and the global secondhand market is projected to double in the next 5 years, reaching $77B.
A thorough quality check before shipping the orders can add value by reducing logistics expense, manpower cost, and the chances of losing a valuable customer due to negligence. Such returns must be resolved by speaking to the customer and convincing them of better service in the future.
The fouled returns happen when perfect items get returned, thus negating a good sale.
These returns can be prevented to some extent but are unavoidable. They constitute the 19% of customers who deliberately order multiple variations of an item (different colors & sizes) so that they can choose what suits them best. Right technology support, and appropriate analytical tools, can help brands investigate the reasons to prevent frauds like “Wardrobing”, or take corrective measures to improve service, in cases like:
- The product in hand does not match its description – It could be a quality issue or some piece in the set is missing. Adding detailed descriptions, high-quality images, the right size chart, customer reviews, and a product video can help customers make more informed decisions. If quality is an issue, then the supplier must be informed to take corrective measures and prevent future returns.
- Incorrect order delivery – Color or size mismatch can happen due to a lapse in warehousing operations. This can be prevented by using the right WMS and OMS solution, that helps automate processes, facilitate 100% inventory-order accuracy and 100% inventory traceability.
- Late delivery- Distributed warehousing improves operations and ensures timely dispatch of items from the warehouse. Partnerships with trusted 3PLs can help deliver orders safely within the promised time.
- Product dissatisfaction – This is an individual choice and difficult to manage unless the customer specifies what they did not like about the purchase. An open feedback mechanism can help understand the customer’s point of view better.
Returns are a constant problem that will only increase with the growth in online shopping. Manual returns processing is error-prone, slow, and cumbersome, hence the need for returns management software that can simplify and improve the buyer and seller experience. Ultimately, the goal isn’t just to reduce the number of returns but also to optimize the process for higher profits. Build greater trust with customers, understand them well to guarantee quality and give them a reason to keep coming back.
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