For retailers, making ecommerce returns a quick win for everyone involved is an important part of managing customer experience. Returns can be tricky and time-consuming—the process involves so many different steps from notifying the customer to tracking packages and processing refunds.
But with a bit of strategic planning and knowledge about the options available, you can make returns easier for customers while also boosting your business's long-term profitability. In this blog post, we'll take a look at how retailers are using new technologies to streamline their return processes and ensure seamless experiences that keep customers coming back.
Consumer returns exceeded $800 billion dollars last year. While that is a gargantuan number, it’s nothing new—returns are a traditional cost center for both brick-and-mortar and ecommerce retailers. Beyond reversed sales and lost revenue, there are other costs tied to returns that hurt retailers' bottom line including inefficient shipping practices and overburdened distribution centers. Moreover, per-item return-processing costs can be 2x to 3x the original cost of outbound fulfillment.
The National Retail Federation (NRF) reports that almost 11% of online returns are fraudulent, accounting for over $23 billion in retail losses. Organized criminal activity notwithstanding, it’s usually a retailer’s best customers who game the system, abuse return policies, and contribute to a loss in revenue. From falsely claiming an order was never delivered, to lying about return reasons in order to obtain free shipping, to "wardrobing" (e.g. intentionally buying a TV for the Super Bowl and then returning it after the game), these tiny hits to revenue hurt margins in aggregate.
Only 35% of consumers abide by the rules and adhere to return policies—that leaves more than 60% of consumers taking advantage of loopholes in the system. The most common activity is around falsely reporting damage or missing packages or sending back ineligible items. Reversing legitimate credit card charges (which the payments industry traditionally characterizes as friendly fraud) accounts for a fairly small portion of customer activity at just under 11%.
Today’s consumer wants to control when, where, and how they return merchandise. Marrying that depth of convenience with affordability is something retailers everywhere are striving to solve.
Unfortunately, the customer experience around the returns process is often fragmented, ambiguous, and slow. An ecommerce customer may have to make multiple contacts with different systems and different operators before getting an RMA (return merchandise authorization) number. That shopper must then wait weeks for their return package to arrive at a processing facility where it must be scanned and accounted for before their refund is issued—typically without any notifications or updates along the way. In other words, the customer is completely in the dark. They have no idea whether their return arrived, was accepted, or when their refund will be issued.
While these problems aren’t necessarily new, their continued existence is emblematic of the ecommerce retailers dragging their collective feet when it comes to the modernization of the returns experience. Their continued existence is also reflective of an opportunity many retailers are missing.
More than 60% of online shoppers decide which retailer they’re going to buy from by considering their policies. Simple, seamless policies almost always win the sale. People want return policies and processes that are easy to comprehend and implement. Done properly, straightforward return practices amplify customer loyalty fueling higher lifetime value.
Almost all retailers understand the value of increased customer loyalty lies in its ability to drive higher lifetime value (loyal shoppers spend 67% more than new shoppers) and retain revenue. But only the wisest retailers understand that stronger loyalty makes life easier in the form of more consistent, predictable sales volume, as well as leading to more referral business and improved brand recognition.
Fortunately, digitization offers a light at the end of the tunnel when it comes to making ecommerce returns a quick win for everyone. Digital return processes simplify the customer experience process for customers. They allow shoppers to submit a return using an online returns portal accessed either in-browser or in-app. Digital returns give customers the freedom to drop a return off at a designated location (e.g, Walgreens), schedule convenient home pickup, and avoid the headache of repacking their purchase or printing a return label. This simplification is why adoption of digital return methods—from printerless to boxless returns—is up +30% in the last two years.
Investing in an automated system for processing product returns provides several advantages over manual methods. Automated systems have the capacity to track inventory more efficiently, reducing the risk of lost or damaged products. Additionally, returns can be processed quickly and accurately by removing human error from the equation. This helps ensure that customers get timely refunds and exchanges on their purchases with minimal inconvenience.
Package tracking systems can be extended to the return trip and integrated with retailers’ supply chain systems, providing real-time processing status. All this serves to eliminate ambiguity from the returns process (the leading driver of customer dissatisfaction) and ensure a seamless experience.
Properly implemented, a comprehensive returns user experience can offer more than quality service and improved efficiency. Retailers can leverage the additional customer engagement to increase sales and margin. A product return is not a liability—it’s an opportunity. Any customer returning a product has an unfulfilled need that needs to be satisfied.
Embrace these digital solutions to reduce your overhead costs while providing a faster and more efficient returns experience for your customers.
There’s no better time to offer these compelling solutions than right now. If your returns process is analog it’s also lackluster. Give people the convenience they want—give people a digital returns experience.