As e-commerce has grown, so too have returns - particularly for brands selling products in a range of colours, shapes, and sizes.
Returns might be costly and time-consuming for retailers to process, but effective management can enhance customer satisfaction and even boost long-term sales. Here’s how retailers can turn reverse logistics into a competitive advantage.
Minimise unnecessary returns
The easiest way to reduce the cost of reverse logistics is to avoid returns in the first place. It may seem obvious, but the benefits are clear: IMRG benchmarking puts the return rate for online purchases at 17 per cent, so any measures that reduce this number will benefit the bottom line.
It is therefore essential to provide customers with detailed product specifications and images to ensure that they know exactly what they are buying before it turns up on their doorstep. If specific products have a consistently higher-than-average return rate, identify recurring problems and the ways to solve them.
In the fashion sector this could mean anything from ensuring sizes and size guides are localised for individual markets to incorporating videos and 360-degree views of items, or even providing fitting tools to help customers understand their own measurements.
The more comprehensive the product overview, the more likely customers are to order just one, correct, item instead of having several delivered to compare before returning, with products sometimes coming back in unsaleable condition.
Streamline the process
Eliminating returns entirely is clearly impossible. When the inevitable does happen, it is important that everyone involved in the process works to reduce costs at every stage.
A clear, easily accessible returns policy will ensure that customers are steered away from contact centres. Centralised collection points for returns enable delivery partners to make multiple pick-ups simultaneously, decreasing mileage and, consequently, cost. This also allows retailers to return fast-moving items to saleable inventory as quickly as possible.
An A.T. Kearney survey suggests that the vast majority (83%) of US and UK consumers prefer to return items to physical stores, regardless of how the original purchase was made.
Businesses should take advantage of this multi-channel behaviour by allowing people to return online purchases to local stores. Not only does this reduce delivery costs, it also provides stores with opportunities to educate customers about products they are interested in. This can help convert returns into exchanges, or result in cross- or even upsell. In fact, the research found that customers are far more likely to make impulse purchases while in a bricks-and-mortar environment than when online.
Build customer loyalty
Retailers should also use reverse logistics as an opportunity to showcase their customer service and deepen their relationships with customers. Research by Forrester shows that almost half (46 per cent) of businesses feel that cross-channel returns policies have a significant positive impact on customer retention, while a third (32 per cent) feel that they are key to customer acquisition.
As well as encouraging future brand loyalty, a straightforward returns policy can also help to convert browsers into buyers.
Where possible, retailers should avoid undermining their returns policies by quibbling over faults or passing costs on to the consumer. The loss of future sales might be far more than the cost of processing the return. When it comes to returns, the customer really is always right.
Convert returns to exchanges
A return needn’t be the end of the line – it can often present opportunities to sell or exchange. Ask for feedback and make customers aware of alternatives. Does the customer need a different colour or size? Is there a similar product available that might be more suitable?
Ultimately, a satisfied customer is often more valuable than an individual sale in the long run, so retailers shouldn’t think of returns and reverse logistics as a ‘necessary evil’. Instead, there are plenty of ways that businesses can reduce the impact of returns and indeed use them to their commercial advantage.