Online return rates average around 20%, more than double of brick-and-mortar stores at 9%. During the holidays, returns can surge to 30% or more!
Returns are an inevitable for online sellers, but some face the challenge better than others. Left unmanaged, returns are a quick way to erode your profitability, especially if you’re planning for aggressive growth.
Are your returns draining your resources? Are you coming up with a plan to deal with them once and for all?
How Online Returns Can Deteriorate Profits
In the past, dealing with returns made brick-and-mortar merchants reluctant to sell online. For native online sellers, returns were an unforeseen everyday battle. With surging online sales though, returns are a reality that all sellers must face when building out their digital strategy.
Analysts estimate that nearly one-third of all online purchases are returned, with categories like apparel, soft goods, and expensive items reporting even higher numbers. No matter why customers are returning an item, eCommerce sellers are feeling the burden of returns on their bottom lines. It’s unrealistic to think that online sellers have better gross margins than online sellers for a few reasons.
For example, on top of spending more to acquire customers, online sellers also deal with high supply chain costs to fulfill that order. Today’s customers have high expectations – lower costs, free delivery, free returns, and safe/attractive packaging for branding purposes. As online sellers race to have the lowest price, their costs often exceed their gross profit.
It’s also important to note that many online shoppers are buying multiple sizes and options to only try on and then return the rest. You usually aren’t able to sell returned items at full price again for various reasons either.
You can see where the costs of logistics (both forward and reverse) gets out of control, leaving online retailers with very little to nonexistent profit margins.
All brands, even the big ones, are facing these same issues! So what’s a seller to do?
Solutions to Consider for Handling Online Returns (In a Profitable Way)
eCommerce sellers need a game plan to tackle returns. While you can’t control every aspect of customer’s returns, you can control your management of returns processes. Here are a few areas to consider when evaluating how you can improve your returns processes.
Write a Return Policy and Stick to It
The easiest and best place to start is your return policy. First, make sure you have a written policy that customers can easily find. This goes a long way with customer trust. It also helps customers understand what they can return and how to do it. At the very least, a written return policy helps both customers (and internal operations) adhere to your rules. You shouldn’t be paying for returns that meet your requirements.
Enable Buy Online, Return In-Store
58% of U.S. online shoppers prefer to return online orders to a physical store.
If you’re a multichannel merchant, consider enabling customers to return online items back to your stores. While not only convenient for your customers, there are typically lower handling costs to deal with the return and it also gives you a chance to upsell customers while in-store. This is a great way to make some extra revenue from a return that you wouldn’t have otherwise.
Pre-Print Return Labels to Prevent Fraud
In addition to making the returns process easier for customers, providing pre-printed labels also helps prevent fraudulent returns. On these labels, you can include original invoice numbers, quantities, SKUs, etc. This ensures that the item returned is the right one and you’re not refunding the customer for anything you shouldn’t be.
Invest in Fulfillment Automation Technology
Automating your fulfillment operations helps eliminate returns resulting from your own costly mistakes. It ensures that the right product is sent to the right customer when you said it would. That means you get rid of returns that resulted from your own mistakes, such as sending the wrong item or shipping to the wrong address.
To automate order fulfillment, you’ll need to integrate your eCommerce systems with your POS, ERP/financial, or 3PL system that helps you process orders. Multichannel integration platforms like nChannel help you do just that.
Help Consumers Pick the Right Product
Last but not least, it’s important to focus on a customer experience that helps the shopper pick the right item so they don’t need to return it. Thinking about what information you’re providing customers. You need accurate product images, rich descriptions, helpful sizing charts, and customer reviews about fit and quality of materials. When your customer gets a product in their hands, there should be no surprises of what it is.
Making improvements like these can help deter returns and the costs associated with them.
Make Returns Your Competitive Advantage
95% of online shoppers will make another purchase if the return experience is positive.
It’s more than worth it to invest in how you handle returns. Disorganized processes can hit a merchant’s bottom line hard. Knowing this, some are turning their returns process into their competitive advantage. Not only are they making it an easy, convenient process for customers, but they’re not losing money on it either. Not all retailers can claim the same!
If you’re looking for way to automate your returns process, see how nChannel can help. Our returns solution helps remove the complexity of returns. You’ll refund a valid return for customers faster, without making any mistakes and saving your team time.