The northward trends in online return rates and the ensuing cost of returns to online retailers have resulted in a direct and distressing relationship with many online retailers. Yet, to keep your customers coming back, it’s important to allow returns and make the process painless. Here is what our partners at Return Prime have to say about successfully managing product returns with some helpful tips to optimize the process.
This could be the one slogan that has holistically and singularly defined the entire gamut of online shopping. Customers have never had it better, from the plethora of choices to the delivery and payment options and even the flexibility in the return and exchange process.
Talking about e-commerce returns, there’s no denying that in recent years, the northward trends in online return rates and the ensuing cost of returns to online retailers have resulted in a direct and distressing relationship with many online retailers. And if that were not enough, e-commerce in India is characterised by hefty discounts!
Truth be told, according to a study by GlobalData, India’s e-commerce market is predicted to grow by 21.5% in 2022, rising at a compound annual growth rate (CAGR) of 18.2% between 2021 and 2025, to reach INR8.8 trillion (S$120.3bn) in 2025.
Simultaneously, in a study done by Forrester Research in 2020, a robust and ‘free returns’ policy saw shoppers in India return at least 25% to 40% of apparel purchased in the online apparel retail segment. The return rate ranged between 15% and 25% in developed markets like the US and UK.
Sources at a leading fashion e-tailer said that this segment's exchange and average e-commerce return rate hovered between 26% and 30% of the products purchased. Significantly, the numbers were single digits for the offline ventures of these brands.
The free returns policy, historically aimed at getting buyers to become comfortable with online shopping, is now threatening businesses big and small alike. In addition to the financial impact, as a responsible citizen, you cannot afford to ignore the cost to the environment in terms of plastic usage, non-sustainable wrapping materials, and fuel resources. So, if you’re an online retailer, give yourself credit for navigating these critical issues.
Worldwide, e-commerce returns are highest in the apparel segment. Shoes and electronics follow. According to an article on Shopify.in, online return rates as high as 20% can be attributed to buyers’ preference-based returns.
While the former includes aspects like size, style, overall fitting etc., reasons such as defective products and product mismatches comprise the latter. Online shopping also accounts for a significantly higher product return rate during the festive and holiday season.
In such circumstances, sellers are constantly under pressure to foster customer loyalty and repeat purchases. So as the return policy becomes integral to the shopping experience, e-commerce platforms' role in managing returns and their operational challenges cannot be undermined.
Apps like Return Prime in the Shopify ecosystem play a support role in helping retailers on the platform seamlessly manage returns, issue shipping instructions and return labels to shoppers, track returned items, restock inspected items, and process refunds of payments to the buyers.
By working seamlessly with Shopify stores, Return Prime provides a customer-friendly ecommerce returns process and helps online merchants to concentrate on their core business.
Fuelled by the e-commerce boom, the tendency of buyers to increasingly make impulsive purchases has triggered an increase in e-commerce return rates. Many online retailers are naturally tempted to make their e-commerce returns process less accessible and more suited to their interests, meaning ‘not easy for customers.’
Imagine filling in lengthy forms or sending emails to facilitate a return or exchange. Given the limited time and attention spans that shape purchase decisions nowadays, a customer's first thought would most likely be, “Why go through the hassle when other sellers offer more convenient product returns?”
According to statistical data published in a survey, 92% of consumers stated that they would buy from the online store if it had an easy and customer-friendly product return process. So if you're aiming to overhaul your returns process from the ground up, here are some proven tips for successful product returns management:
1. Know the Cost of Returns
Most buyers are averse to paying return shipping fees. So, at the very outset, do your number crunching and accurately calculate the cost of the reverse logistics involved in the e-commerce returns process. If unviable, you could consider issuing a full or part refund while letting your customer keep the original. You could also offer the facility of store credit and gift cards instead of cash refunds.
In retrospect, decide early on if going online will be profitable for you in the first place. Of course, if you are confident about the demand for your product, make the most of the online platform to maximise your profits.
2. Be Upfront About Your Returns Policy
Provide maximum visibility and clarity about the terms and conditions of your returns policy. This includes the duration and conditions for return, all exceptions and refund payment options. Publish it prominently on your website, list it in the FAQs section and on your partner websites, if any. Also, include a printout of the policy in the package being delivered to your customers.
3. Understand the Nature of E-commerce Returns
Returns may be controllable or out of your control. Efficient logistics planning and management, including appropriate product summaries, reliable delivery partners, sound inventory management systems and proper packaging, are some ways to minimise or altogether eliminate controllable returns. On the other hand, if your buyer is inherently unhappy with their product choice to satisfy a specific need, there’s little much you can do.
4. ADDIE it
ADDIE is an acronym for Analyze, Design, Develop, Implement, and Evaluate. Track return rates and reasons. Use every return opportunity to analyse the reason for the return. Create feedback channels for customer input on how you could design and develop more relevant products. Feedback forums are always a great resource to help you implement improvements in your overall product and marketing strategy.
For example, suppose you identify the tendency in a particular consumer to return products very often. You may want to limit your push message and emails to such customers before a big sale. Conversely, you could forward them positive product reviews after a deal has been made to influence them to retain the product. Evaluate your online retailing strategies regularly to stay connected to your customers.
5. Prudently Process E-commerce Exchanges and Returns
Data available shows an overwhelming preference among online customers for e-commerce sites that offer speedy processing of refunds. This is one attribute that would lead to favourable reviews and recommendations, both online and offline.
6. Provide a Transparent Product Return Tracking
Just as a customer is eager to get the product delivered, the same goes with the returns or exchange process. A transparent policy involves providing real-time tracking updates and even SMS alerts to notify customers about the shipment return status.
7. Customise Your Solutions
If you’re operating in both the online and offline space, invest in a Point of Sale (POS) system that helps you navigate an integrated shopping experience wherein customers have the flexibility to buy online and make in-store returns. In the case of multi-located stores, enabling customers to return their purchases in any store is a great way to manage product returns and build loyalty. The facility to access and process the orders of different stores from any checkout counter across locations is a huge plus in any returns management programme. Needless to add, updates in the returns’ status should instantly and accurately reflect across the system. An efficient POS removes the problems of double entries and accurately records details of the sales, inventory and customers.
8. Pre-empt Holiday Traffic
Impulse purchases hit all-time highs during the holiday season, leading to high returns. Wrong fits, duplicate gifts, guilt-shopping binges, the list runs long. Partnering with a reliable delivery partner with the capacity to increase their returns pick-up fleet and reassign routes flexibly reduces the operational slowdowns often witnessed during high-volume days and allows you to adhere to their returns policy as efficiently as possible.
9. Tie-up with a Fulfilment Centre
Depending on the scale of your business, it may benefit from using the services of a fulfilment centre to manage your product returns efficiently while you focus on your sales. Fulfilment centres have the expertise to reengage customers through after-sales support following a product return, coordinate with the intermediaries such as couriers and shipping partners, and handle customer queries.
10. Make headway with Artificial Intelligence (AI)
One of the top reasons for returns is dissatisfaction with the fit and colour. Accurate imagery can enable online customers to represent the product appropriately. AI is a great tool to use imagery in fashion products like clothes, shoes, accessories etc.
With AI, shoppers can have a virtual dressing room experience by viewing items on models that most closely match their body size and types and also mix & match looks from the store catalogue. Thus, another ****brilliant way to manage returns is by reducing returns altogether.
In a nutshell, by creating an easy, customer-friendly return process, the retailers can drive up loyalty and more sales in the long term. Online retailers can benefit from apps like Return Prime to manage all returns, exchanges and refunds in one place. From powerful analytics and reporting to logistics and customer support, it creates a positive product return experience.
E-commerce has redefined many traditional retail concepts and how we build trustworthy brands that enjoy repeat purchases. A dedicated product returns management team with convenient return policies is a straightforward way ahead for every customer-focused brand.