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Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

'Tis the Season for Post-Holiday Product Returns: Are You Prepared?

24-Jan-2018
'Tis the Season for Post-Holiday Product Returns: Are You Prepared?
With the holiday buying fever behind us, the avalanche of product returns is now underway. Given that £17billion worth of goods was bought online during the Christmas shopping period, from Black Friday to Boxing Day – it can be expected that the frenzy of returns will hit many retailers hard. Since 15%-20% of goods bought online are normally returned, that means that £2.5billion worth of returns is expected, according to research from LCP Consulting.

The expected surge in returns was so great that Royal Mail even dubbed Tuesday 2nd January, ‘Take-back Tuesday’, as returns were expected to double compared to December’s daily average return figures. Online item returns are expected to be particularly high following a change in shopping behaviour within British households. 90% of households now have access to the internet, compared to only 57% in 2006 and 86% in 2016; online shopping has in turn seen a sharp increase with 77% of adults buying goods or services online, compared to only 53% in 2008, according to research from the Office of National Statistics.

However, despite the sheer number of returns expected and received every year, many retailers are still not putting enough emphasis on developing and implementing efficient return strategies. A customer’s return experience is as important as their sales experience; today’s customers expect flexibility, convenience, and transparency in their return experience. Moreover, further research from Royal Mail indicates that nearly half of shoppers (47%) said they would be unlikely to shop with a retailer again if it charged for returns, and three in five shoppers expect to receive free returns regardless of the amount spent, and said they would switch retailers if it wasn’t provided.

Clearly a frictionless and quick returns process is vital if retailers want to retain customers; after all, Royal Mail research also concludes 60% of shoppers would be less likely to shop with a retailer again following a difficult returns experience. The impact of a good versus a poor customer experience shows that return policies are no longer just part of a company’s back-room logistics strategy—they’re now a valuable lever for brand equity. Companies with a suitable and generous return policy are often the ones with the highest number of loyal customers, and these successful retailers are likely to offer a range of services to ease the process.

Features such as returns tracking capability, which 73% of consumers said they would prefer to have access to; along with prepaid returns labels included within the delivery; and re-sealable packaging can have a crucial impact on how seamless the customer experience is. Royal Mail research uncovered that 81% of consumers expect and prefer for returns labels to be included in the delivery, and nine out of ten would consider themselves likely to shop with a retailer again if re-sealable packaging was provided. This attention to detail, along with speed, guidance and visibility are crucial in the eyes of today’s consumers. 95% believe it’s important to be notified when their return has been refunded and 75% believe in the importance of guidance about which returns label to use and the speed at which the return is refunded.

Amazon, John Lewis, IKEA, are all known for exceptional returns policies that are as simple as their purchase process, and shoppers have taken notice. IKEA, for instance, has a 365-day return policy and John Lewis a 90-day policy. In today’s highly competitive retail market, hassle-free return policies and quick processing are essential to win over new customers, keep existing ones loyal and, ultimately, turn a profit.

In addition to providing a personalised return slip and a prepaid return label, among other features to ease the process when the delivery goes out to the customer, here are five tips online retailers need to consider to reduce the friction of their return:

1. Make the return process as transparent as the order process
Even today, there are still ecommerce players who make the return process as difficult as possible for shoppers by hiding (or not even listing) their return policy for orders, not providing status updates immediately by email, or not notifying the customer when the returned goods have been received. Customer service cannot be deliberately neglected, and constant communication of status should be on the forefront of retailers’ minds, no matter what stage the order is in.

2. Speed up your return processing
To build confidence and rapport, the shopper should be informed the moment the returned item has been received. Speed is on the side of the retailer as well; goods need to be seen as available in inventory and approved for sale to generate revenue. The quicker the returned item is checked for integrity and re-introduced into the system, the faster sales soar.

3. Keep goods handling and customer service separate
If most returns are managed using a standard process, they won’t need to be reviewed by a customer service agent. The small number of returns that do need special treatment can then be kept separate for customer service attention. By splitting the returns process this way, most returned goods can be put back into inventory much faster, and even shipped more quickly if ordered by another customer. For example, by providing an online portal where consumers can initiate a return, the retailer knows from the moment the return is created what items to expect to receive and when.

4. Use automation
Two areas where retailers can speed up the returns process using automation are reimbursement and inventory management. After a return is processed, the amount owed to the shopper should be automatically reimbursed or credited to the credit card or PayPal account. Also, new inventory should be updated immediately via a warehouse management system in the online store and all sales channels to establish the opportunity for the next sale.

5. Consider returns as an important customer service practice
One could argue that the “return” burden has been lifted from consumers’ shoulders. Today, it’s become the responsibility of the retailer to offer convenient and simple return options for customers. The bottom line is that customers care about returns. Retailers that provide a complete end-to-end customer service experience incorporating flawless returns processing are more likely to see repeat customers and increased revenue.

As the industry continues to learn lessons from each holiday season, smart ecommerce players who take these tips into consideration will be ahead of the curve with a more sound, common sense return policy and processing strategy.

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