Did you know that eCommerce sales grew by 30% in 2020? But with increased sales comes increased customer expectations and also increased returns volumes.
Having a great return strategy in place can put nervous shoppers at ease since you are making clear what your returns policy is. This added level of transparency can even build customer loyalty.
There is also a greater opportunity to embrace returns as a strategic opportunity to lower customer acquisition costs, retain more sales, and increase customer lifetime value (LTV).
Why returns management is important?
The returns management process is a crucial piece of successful ecommerce exchanges for both the retailer and the shopper. Both parties can benefit from a well-organized returns solution. Here’s how:
Returns management for retailers.
For retailers, returns mean taking a loss. Returns hurt profit margins and conversion rates. Without a robust returns solution in place, many retailers will fall into the trap of overspending up to 20% on inefficient processing and reverse logistics. However, correctly positioned, a good returns policy can have the opposite effect by driving growth.
Anything you can do to make the return process easier can put shoppers at ease and add to your bottom line.
The easiest way to do this is with a transparent returns policy. One of the best examples of this is Rothy’s return policy. The company was one of the early adopters of ecommerce returns technology and it has been a massive part of their success selling online. By offering their innovative return options (including box-free, in-person dropoff) and intelligent one-click exchanges, they have been able to increase overall customer LTV and satisfaction despite being in an industry heavily impacted by returns.
How to make a return process eco-friendly and more sustainable for the environment.
Returns have more than just an effect on the customer experience and the business’s profit margins. Processing online returns can have a significant environmental impact. Companies can help offset the impact by implementing a sustainable returns process.
One way to accomplish this is by using lighter, more sustainable packaging. The less packaging the less wasted material goes into a landfill and the less weight there is to impact shipping costs. Another way to make the returns process more eco-friendly is by optimizing reverse logistics, implementing returns aggregation. Happy Returns has been one of the early pioneers of this sort of concept, providing a box-free, label free in-person drop-off that involves no net-new cardboard for any returns they handle as they use fully-reusable totes to transport items within their network. In addition to reducing the carbon footprint associated with ecommerce shipping, returns aggregation can provide significant cost-savings benefits as well. Smart logistics companies can help ecommerce businesses by holding back return orders for a set period of time before shipping them back together.
As a bonus, many customers today make purchases based on corporate social responsibility, or the way a business behaves ethically toward social, cultural, economic, and environmental issues.
In the next section, we’ll discuss more returns management tips to help you create a positive experience for shoppers and improve your bottom line.
Five return management tips to help you cut costs, reduce refunds, and increase LTV.
These five tips will help you improve your returns management process for a seamless customer experience.
1. Increase your exchange rate by providing custom recommendations
You can leverage your exchange rate to keep more sales by providing customized recommendations. This is particularly beneficial if you sell apparel or accessories.
For example, if you sell running shoes, many shoppers will return shoes because they are the wrong size. You can retain more revenue by automatically suggesting a size up to help the shopper find the right fit instead of simply offering a refund.
Pro tip: You can use Happy Returns one-click exchange feature to make this exchange even easier.
2. Reduce the need for shoppers to call customer service
Another way to cut costs and improve the customer experience is to eliminate unnecessary calls to customer service regarding returns. By automating the returns process with software, such as Linnworks and Happy Returns, you no longer have confused and frustrated shoppers calling your customer service line for help.
These sorts of “Where is my refund” calls often stem from refunds not being released to customers until the warehouse is able to inspect/process the items. Happy Return’s Return Bar Network solves this problem by providing the customer with an immediate refund once the item is dropped off as they validate the items being returned at their return bar. This can help dramatically reduce customer service inquiries and can be a great way to build customer loyalty.
3. Offer shoppers choice and convenience with multiple return methods
Shoppers want transparency and options when it comes to making returns. Providing multiple return methods - be it in-person drop-off, automated shipping labels, etc - goes a long way.
In fact, the fastest way to leave a bad impression is to make it hard to return an item. For digital brands with no brick and mortar stores or an omnichannel brand with only select storefronts - an in-person option can be a gamechanger. If the only option you provide a client is drive to wait in a long line at the Post Office the customer might choose to shop elsewhere next time.
4. Reduce shipping costs with aggregation and reusable packaging
As mentioned above, sustainable packaging isn’t just good for the environment. It can also help lower shipping costs. Recycled or eco-friendly packaging can reduce the number of materials needed to ship, ultimately resulting in reduced shipping charges.
For example, HP was able to use fluting and liner sourced from responsibly managed forests to cut their packaging materials by 29%. The packaging ended up weighing less than their old packaging, which simultaneously lowered shipping costs and carbon emissions.
Another example is the Happy Returns cardboard-free returns programwith participating retailers. Returns are aggregated and shipped in reusable containers to regional Return Hubs for processing, which are then processed and shipped in bulk in reusable containers.
In addition, using shipping management software, such as Linnworks, is another way to cut costs with shipping since you can consolidate shipments/returns, among many other benefits. After all, it is much cheaper to ship one 20-pound box than 20 1-pound boxes.
5. Take advantage of intelligent processing to make restocking easy
A returns process isn’t solving all of your returns challenges if it doesn’t include a solution for processing returned items. Retailers with limited warehouse resources often have to decide between fulfilling orders and processing returns.
Depending on your business logistics and the reason for the return, you’ll either restock the item, send it back to the manufacturer or supplier, or write it off entirely. These processing choices affect your inventory and financials. For example, you can use software, like Linnworks for returns support restocking.
Unfortunately, delayed returns processing can lead to unhappy customers and more calls to customer service inquiring about the status of their returned item(s).
Intelligent processing software can simplify this process and enable smoother restocking. This is particularly important during the holiday season when up to 13% of holiday purchases are sent back to retailers.
The key to managing costs and expectations for your returns process is transparency. Whatever your policy is, make sure it’s written clearly and easy to find on your website. Knowing your policies upfront doesn’t just help consumers return their purchases. It also goes a long way in establishing customer trust and brand loyalty.