As we all know, the COVID pandemic has accelerated the consumer shift to making purchases online, resulting in 44% e-commerce growth in 2020 — this represents 21.3% of total retail sales, compared to 15.8% in 2019. This volume shift to online is here to stay; 2021 e-commerce sales are expected to grow by an additional 13.7% by the end of the year.
The dangerous news for retailers is that around 20% to 30% of products ordered online are returned, as compared to only 9% in brick-and-mortar stores. If retailers don’t approach this problem head-on, this accelerated shift to e-commerce can have a significant negative impact on their sales and profitability, as higher returns add up to increased costs, reduced margins, and lower revenue. On the other hand, if optimally managed, returns can actually become part of a retailer’s growth strategy — easy return policies can grow sales, and smart preventative tactics can reduce overall returns, helping retailers to both grow and retain sales.
Retailers can design returns to be a strategy for growth
A former head of customer experience at Amazon said, “Customers who had a great seamless return experience would drive more sales than a customer who never had to return a product.” To simplify that statement, returns can boost sales.
In order to enable growth, returns processes need to achieve three “wins”: enhanced customer experience, cost optimization, and revenue preservation. Here, we’d like to offer five best practices to help retailers achieve these goals.
1. Take ‘return anxiety’ out of the shopping experience by making a painless return process transparent and visible
Creating a transparent, upfront, and risk-free shopping experience will relieve customers’ worries. Communicating the simplicity of returns as part of the shopping experience will help them shop more confidently. For example, offer free returns and complimentary remake guarantees on every product page.
2. Preventing returns loss: take proactive steps to reduce the need for returns using predictive return analysis
Minimizing the customer’s need to return products can contribute to better customer experience and cost optimization. Historically, the top two reasons for online returns are an item arriving damaged or broken, and a poor or misleading item description. To prevent this, retailers must have dedicated process owners continuously performing return analytics, identifying top reasons for returns, monitoring customer reviews, and proactively identifying and fixing the root causes driving returns.
Some ways to prevent returns for most common issues include the use of augmented reality and “fit true to size” reviews; evaluating and improving packaging to reduce returns due to damages; and establishing clear guidelines for accurate product descriptions and imagery.