The faux holiday National Returns Day came earlier this season than previous years. UPS estimated that they would process and ship 1.5 M returned packages on December 19th and expected another wave of 1.3M packages to hit on January 3rd. It’s unusual to see a spike in returns before Christmas. Experts, however, contribute this new trend to major holiday deals happening even before Black Friday. No matter when “National Returns Day” happens though, returns are an inevitable part of holiday selling or retail in general. And how you handle returns can have a major impact on both your profitability and customer satisfaction.
So, were you ready to handle returns this year? If you weren’t, here’s our latest tips and advice on why you should improve returns in 2019 and how to do so.
How Returns Impact Your Profitability
Are returns killing your online profitability? When left uncheck, mismanaged returns processes can have a serious effect on your bottom line, especially for online retailers.
It’s no secret that customers want free returns. In fact, 60% of shoppers say free returns shipping is a top element for a best returns experience. The problem for retailers with free shipping and exchanges is that handling costs can quickly decrease the profitability of a transaction. Then, the returned product often can’t be sold at the original gross margin. It’s crucial then that retailers consider the cost of handling returns and how you can lower it.
Beyond just the direct financial impact, returns can also be key to retaining customers. Studies show that of the 60% of online shoppers that make at least one return or exchange per year, 95% will make another purchase if the return experience is positive.
If your returns policy and process need some improvement, now is the time to make it a priority. Returns will always be an important aspect of customer experience and expectations will continue to rise. The good news is that there are several ways you can improve your processes through best practices and technology.
How to Improve Your Retail Returns Processes
How you handle returns is a major part of your customer experience. Here are some top areas to focus on to make significant changes to how your business handles them.
Make Return Policy Known
When’s the last time you updated your return policy? Do you currently have one at all? First and foremost, create or review and update your return policy. Make sure it’s easy to find, concise, and easy to understand. Customers should know what, why and how they can return products.
Making your policy easy to find and understand helps create trust with your consumers. It demonstrates that you care about the return policy and sets customer expectations.
Further, a return policy helps you stay organized internally as well. It ensures employees are on the same page and able to communicate terms correctly to customers.
Note: It’s okay to have a strict return policy or expect customers to pay for shipping. In some cases, like customizable art pieces, your items might not (and should not) be returnable. Customers need to know this ahead of making their purchase though. You don’t want customers finding out on the phone from a customer service rep that they can’t return an item after they’ve already invested in it.
Simplify the Returns Process
Right behind free-shipping, customers want a hassle-free policy. As retailers, you should consider making the returns process as simple as possible.
This can include including pre-printed shipping labels and box for a return. Customers shouldn’t have to jump through several hoops to make a return. Many retailers are making it as simple as slapping a label on a box and dropping it off at the nearest post-office.
Note: Pre-printed shipping labels can also help prevent fraudulent returns. The label usually includes original invoice numbers, quantities, SKUs, etc. When you receive the return package, you’ll know everything that should be in it.
Give Shoppers Options for Returns
Even beyond the ease of pre-printed shipping labels is giving customers multiple options for where to return their items. In a 2018 UPS Pulse of the Online Shopper Survey, 75% of online shoppers have shipped items back to the retailer and 58% prefer to return items to a physical store.
If you operate physical stores, consider allowing customers to return online items in-store too. This can be a great way to offer an option that doesn’t require customers to pay shipping fees. Having customers walk into the store also presents an opportunity to upsell them for different items.
When thinking about the in-store return experience, make sure to consider associate training, short service lines, accessibility, and needed paperwork on both ends. All these aspects are important to creating a good in-store experience.
Automate Returns Process on the Back-end
Not everything that goes into a good returns process is customer-facing. For a retailer to properly process a return and issue a refund, there’s a lot of processes that must go on in the background of your business. If you operate an eCommerce platform and/or a POS and ERP, there’s a lot of order and return data that must be passed between your operational systems.
Without automation, it can fall on your team members to record and enter order data themselves between your systems in order to issue a refund. Manual data entry can be time-consuming and error-prone. This means your company can be slow to issue refunds or do so incorrectly – either are frustrating to customers.
Consider integrating your retail systems to help automate the returns process. This ensures refunds are issued in a timely and correct manner. It can also help support complex returns requirements like partial returns for a single online order.
Prevent Your Own Mistakes
How many of your customer returns are the result of your own mistakes? Sometimes a customer returns a product because they received the wrong item or the item received wasn’t the quality as expected. As a retailer, these are two areas you can try to improve and take preventive action to reduce your return rates.
For online sellers, it’s especially true that you want to help customers pick the right product and set expectations of the product’s features and quality. Your product information should include accurate images, detail-rich descriptions, helpful sizing charts, and customer reviews. When your customer gets a product in their hands, there should be no surprise of what it is. Doing this extra work upfront can help lower return rates for products that are the wrong size or don’t meet expectations.
Another common mistake among retailers is shipping the wrong item or quantity. If you fulfill eCommerce or in-store orders out of an ERP, you have to transfer order data between your systems. Relying on manual data entry can lead to the wrong SKU number or product quantity being entered. These types of mistakes can lead to extra returns costs that you could have prevented.
One way to solve this problem is to automate fulfillment between your retail systems to ensure the right order information is passed between your systems. There are integration solutions available to do just that.
What to Do Next
Handling returns is a key aspect of retail. When processes are mismanaged, it can affect your bottom line and customer satisfaction ratings. When done right, you can encourage customers to make repeat purchases and even develop a competitive advantage over others. It’s all about making a smooth, easy process for customers.
There are many ways to improve your process and hopefully these tips start you off in the right direction. To read further about improving your returns process, check out the following articles: