Returns are the new normal. And how you deal with them – before and after purchase – can differentiate your brand, give you a competitive advantage and even make you more profitable. Here’s how to tackle the returns challenge and delight your customers with new ‘try before you buy’ services.
For more, see our earlier blog on why returns should be part of your customer experience strategy.
You’ve decided to meet the returns challenge head on. You want to offer new services that give online customers the same opportunity they have in-store to see their goods before completing a purchase.
You know that fast, easy and inexpensive returns are an important part of being customer-centric. And that the pros outweigh the cons. Streamlined and flexible returns can actually increase conversions and drive better customer experiences that drive profitable growth.
But the move will create new challenges.
Here’s how to overcome the traditional limitations of returns to capitalise on the trend.
Eliminate internal barriers
When introducing flexible new returns policies you’ll need to eliminate the structural and operational barriers and cultural behaviours that get in the way of frictionless and fast returns.
Create strict SLAs, transparent policies and efficient workflows so that your staff can process returns well within the 3-5 days consumers now expect and get products quickly back into inventory.
The largest retailers are adding staff, increasing warehouse space and even establishing separate departments to handle reverse logistics. In the future, you’ll be able to automate the process of finding the best home for your returned and excess inventory.
New returns optimisation platforms like Optoro use machine learning and data-driven decision-making to route returned goods from the first touch (the retail store or online return) to their next best use – such as an individual, business or charity. That’s reducing time spent on processing returns and reducing waste and costs.
Set KPIs and measure margins
There are numerous options to consider as you implement a great returns process. Many of them will have a direct impact on your margins so it’s important you set and measure different KPIs and the actual costs for various returns options.
Make sure you allocate costs to the right channel. For example, build the cost of returns into the cost of online sales so that you’re not artificially boosting eCommerce margins. And by pushing the costs for refunds and exchanges back to the original sales location, your bricks-and-mortar stores won’t be penalised by online returns and will be incentivised to process them promptly.
Measure your sales revenues after the returns time period. That way you’re not inflating your sales by including products that customers have no intention of buying.
Streamline the process
A fast returns process – operated and managed well – can help drive growth. That’s because free returns or exchanges are the number two reason why consumers are more likely to shop online.
Create transparent, easy-to-understand terms on your website (and other customer comms), just as you would a featured product or service. Give customers a simple process via an online self-service portal so they can enter return reasons and item conditions, and you can quickly pre-authorise returns.
Make it simple for customers to send items back by automatically emailing a return label when an item is shipped, or including a pre-paid return label in the package. Offer a choice of delivery options, such as dropping off the item at the local post office or a courier location of their choice.
Shipping platforms like StarShipIT can make returns easier by ensuring your products get to customers fast and can be returned swiftly so that customers can be promptly reimbursed or billed for the correct amount.
And give customers the option of ‘buy online, return in store’. Research shows that online shoppers overwhelmingly prefer to return in person to avoid the hassle and wait of returns by mail.
In future, you’ll be able to reduce shipping and support costs and boost customer loyalty by outsourcing your returns. Startups like Happy Returns in the US are building networks of physical return locations (called Return Bars) to enable in-person returns from online shoppers. Think ‘buy online, return to store’ for retailers who don’t have stores (or just a few).
Let customers ‘shop now, pay later’
Payment options are key to implementing TBYB. Several financial providers are offering delayed payment for online shopping, with Klarna forging relationships with hundreds of online retailers.
Klarna offers a free payment delay so that customers can get the goods whenever they want, return anything they don’t want and pay 14 or 30 days after delivery (or in interest-free instalments).
First-time customers only have to enter a few simple personal details to complete the transaction. This speeds up the process and reduces the chance of friction that leads to cart abandonment.
Letting customers pay later alleviates the returns hassle. Since the payment isn’t made up front, there’s no wait time for a customer to be credited back. Customers can have the option to postpone their payment due date while the return is processed.
For retailers, it’s risky to send things to shoppers without paying. However, TBYB payment providers let you get paid when items are ordered. Shoppers are also protected. Buyer protection ensures that customers only pay for goods they receive and keep.
Understand your returns data
To reduce your overall return rate, monitor and analyse the data to identify root causes. Many retailers have made significant progress on reducing returns due to incorrect items being shipped out, products being damaged in transit or faulty goods received.
Do you understand your serial returners? You might be surprised at what the data reveals. They’re typically not fraudsters out to abuse the system by using it as a rental service. The more goods a customer returns, the better he or she could be for your business. For example, online retailer Zappos found that its best customers are the ones who return the most orders.
Be sure you’ve got the visibility and tools to monitor and manage the end-to-end returns process for the best customer outcome and most profit for you. You’ll need efficient workflows, transparent policies, strong supplier relationships and effective inventory systems.
Reduce avoidable returns
If it’s difficult for customers to be sure of fit, colour accuracy or product quality, then they’ll take advantage of your flexible returns policy to order multiples of the same item in different combinations, fully expecting to return all the rest.
Look for ways to improve the chances of customers getting a product that meets their expectations so that returns become unnecessary. Can your product descriptions be clearer and more accurate? Images and video can help. Can you include a sizing chart or improve the one you have? Can you add customer reviews?
Leading fashion retailers are trying augmented reality (AR) technology in their apps to show how the same outfit looks on people of different sizes. For example, ASOS has partnered with a tech startup (Zeekit) to digitally map garments onto the bodies of real models (not virtual avatars or mannequins). This not only creates a more seamless shopping experience for customers (who previously had to guess how an item would look in real life) but also saves time and money photographing different size garments on different size models.
Start creating your new returns and TBYB experiences
With the right preparation, partners and technologies, you can turn surging returns into great customer experiences and profitable growth.
If you’d like advice on how to exceed customer expectations with more streamlined and flexible returns, get in touch. We’d love to help you put the right technologies and processes in place to capitalise on the trend without cannibalising your margins.
For more on how to give your retail business the flexibility and agility you want, download this unified commerce ebook.
