In many ways, the e-tail world isn’t all that different from the retail world. Customers like to browse well-organized, attractive spaces including digital ones, and want to be able to ask questions if they need to. They often want to try on clothes or see how objects look in their homes before they make final purchasing decisions. And, when they’re not satisfied with a purchase, they like to be able to return it with a full refund and no return shipping fee.
Returns are always hassles for customers especially when the original receipt is required, only store credit is available or when a restocking fee is applied. In the e-commerce age, the customer’s work is compounded. They have to re-package items in the original packaging, print out a shipping label, potentially pay the shipping cost themselves or take items to a physical store to return them—all of which they were trying to avoid in the first place.
That said, many e-commerce companies have used returns to their advantage. Companies like Trunk Club and Boll & Branch operate on the “try-before-you-buy” model, and include a prepaid return shipping label and return packaging with their shipments. Returns don’t have to eat into your bottom line. In fact, they can occasionally improve it.
Returns can be a logistical challenge, a customer experience nightmare or a great business opportunity. It all depends on what makes sense for your company and how you implement it.
How Big is The World of Returns?
In the shipping industry, returns are known as “reverse logistics.” This sector is so big that it even has its own trade organization, the Reverse Logistics Association.
Returns form their own ecosystem within the logistics world. There are a number of avenues within the supply chain that they might take. Some are returned to the retailer or distributor to be sold in-house again. Others are sold on secondary markets. Defective merchandise goes into repair markets and others go straight to landfills.
The U.S. Postal Service Office of the Inspector General has looked into returns, too. In a 2017 study, it found that e-commerce purchases worth between $113 billion and $132 billion were returned.
Further, online purchases were three times more likely to be returned than store-bought ones. This means every company that sells online needs to know how to navigate the world of returns.
What Retailers Can do to Help Ease The Burden of Returns
Large retailers have a key advantage in returns: if customers want to return products they bought online, they probably live close enough to a brick-and-mortar store to do it in person. This model is becoming so popular that it even has its own acronym, BORIS (Buy Online, Return In Store).
Whether BORIS is an option for your company or not, all online sellers should take some lessons from retail returns.
Solidify a Returns and Exchanges Policy
First, it’s essential that you write, publish and consistently apply a returns and exchanges policy. Customers need to know what to expect when they buy your product. If they try to return in a way that doesn’t align with your policy, you can point to that published text in their order confirmation or original receipt when you explain why you can’t accept their return.
Free Return Shipping is Not Needed
Second, you don’t need to offer free return shipping. While customers expect low-cost to free shipping charges upon purchase, they don’t yet expect the same from returns. It’s okay to ask customers to foot all or part of their return shipping fee.
Business Days That Qualify For a Refund Request
Third, set and stick to a time frame for returns. Does a shipment need to be postmarked by a certain day or received by then? Again, publish and promote your policy so customers know about it.
Resource: Estimate Your Shipping Costs: What Goes Into The Rates You Pay With FedEx and UPS
Try Before You Buy E-Commerce Business Models
In line with the rise of subscription box services, many e-commerce companies now offer customers the chance to try before they buy.
Stitch Fix, Trunk Club and some services from ThredUp ask customers to fill out surveys about their clothing preferences, mail them several pieces and allow them to pay for what they keep and return the rest.
Warby Parker, an eyeglass service, sends potential buyers five frames that they get to try out for five days. Again, they can keep the ones they like and return the rest.
These companies are able to sustain such services because they’ve planned for them. They know that for almost every box they ship out, a parcel will be returning. For these companies, the calculation is simple: giving customers the chance to try on clothes or accessories builds trust and loyalty, and they will likely buy at least a few things—making it worth it for companies to absorb the cost of returns.
Why You Don’t Want a Negative Return Experience
Customers seldom interact directly with customer service, but in the case of returns, they almost always do. The clarity of return policies and helpfulness of customer service representatives working on returns can greatly impact customer experience and brand perception.
Returns are never particularly fun. After all, the customer has decided they don’t like a order and knows they’ll likely have to spend more money to ship it back before they get their refund. But you can make them efficient and easy.
Create a simple, straightforward return or exchange policy and communicate it clearly to your customers. Explain where they need to go, what shipping method they need to use, what they’ll have to pay and when they’ll get their refund. Then, stick to it.
Every retailer knows that negative experiences affect consumer behavior and repeat purchases. But the opposite is true, too. Make returns easy and customers may end up becoming more loyal to your brand, because they’ve seen how easy shipping can be.
The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.
