E-commerce Return Analysis: Solution to the Trillion-Dollar Returns Problem
  • Anuradha Kapur

  • 4 minutes

  • 17 February, 2022

E-commerce Return Analysis: Solution to the Trillion-Dollar Returns Problem

A free returns policy by online retailers has been pivotal in the exponential growth of online sales platforms. The easy returns option has not only lured conventional brick and mortar stores, customers to online sales channels but has also given the customer more comfort and confidence in online shopping.

This has indeed led to a substantial positive impact on sales and revenues in ecommerce business channels. However, this “freebie” has a big cost attached to it. Once all the costs associated with ecommerce return management are added; shipping, storing, inspecting, segregating, etc, sometimes this is greater than the original sales price. Not only does this cost a logistical nightmare but steadily eats into the bottom lines of online retailers. 

Studies have shown that in 2021, retailers expected 16.6% of the merchandise sold, back in returns, which is a 6% jump from the previous year. As sales continue to increase, so does the returning trend. As per a recent NRF report, for every $1 billion in sales, a retailer incurs approximately $166 million in merchandise returns. These ecommerce return rate statistics have made it inevitable for retailers to devise a robust returns management strategy. 

Since there is no way to control consumer behaviour or stop online shoppers from ordering multiple variants to try and experiment, businesses must make returns processing hassle-free and efficient. It’s time to make ecommerce return policy more robust and reverse logistics less expensive. 

Ways to minimize ecommerce return rate:

  • Website Design: Making improvements in the layout and flow of the website eliminates the chances of clicking on the wrong product or size.
  • Product Display: Ensuring the product display has multiple high-resolution photos. One can also consider including product videos.
  • Product Description: Making sure the customer comprehensively understands the product and helps to ascertain if the product is right for them.
  • Sizing Chart: Providing a size chart relevant to the target customers’ area or geography.
  • Packaging: Ensure fool-proof packing so products do not get damaged during shipping. Use the best packaging material for that product type.
  • Online Support: Supporting customer concerns with a Live chat option via chatbots can eliminate any customer’s guesses while ordering.
  • Order Confirmation: Using online tools to confirm order placements, especially cash-on-delivery orders. This adds an extra layer of security, ensuring the orders are genuinely placed by willing customers
  • Order Accuracy: Being first-time right in the entire process from order receipt to delivery—right product to the right customer at the right time in the correct quantity.
  • Clear And Concise Returns Policy: Displaying your returns policy on the home page, highlights the terms and timelines of the hassle-free returns.
  • Transparent Delivery Lead Time: Providing an estimated date of delivery down to the pin code level

Factors to minimize the negative impact of product returns:

  • Data Analysis:
    • Region & Pincode wise: Use actual data to analyse area-wise consumer behaviour. This helps ascertain trends; perhaps a particular product type, size, colour, or fit may not be most suitable for a given area.
    • Product Categories: A streamlined returns processing should help list most returned product types and help formulate better sales and pricing strategies.
    • Reasons quoted for return: 100% traceability goes a long way to understanding reasons cited for products returned, and consistency analysis of the same should be helpful to set effective countermeasures. 
  • Logistics: Multi-system integration to streamline reverse logistics and enable returns at multiple warehouses or physical stores. Reverse logistics being messier than forwarding logistics, a data-driven multi-integrated tool will help reduce chaos and costs to manage returns more efficiently.
  • Inspection: Of returned products to draw relevance with reasons cited by customers for their returns and optimise re-sale of sound products.
  • Segregation: Of defective or damaged products will ensure the same product is not sold again and returned repeatedly.
  • Feedback: Both to and from customers who make returns will help retain valued customers and build trust and loyalty.

The Solution:

Increff Returns Management Solution elements all the above concerns to make returns management a lot easier and less costly. A few more features of this tool include:

  • Web-based automated SaaS tool
  • Segregates returned items into refurbished, rejected and re-saleable categories
  • Provides 100% Traceability
  • Reduces sales loss opportunity
  • Faster SPF claims to process
  • Built-in reports
  • Enables multi-warehouse returns
  • Is multi-system integrated

Author: Anuradha Kapur

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